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Short-term loans in Canada 

Even when you’ve planned your finances, unexpected financial obligations can lead to requiring some support in the short term. Alpine Credits is here to provide short-term loans with a simple application process and approval in less than 24 hours. 

Whether you need $10,000 or $100,000, homeowners can utilize their home equity to get immediate funding, regardless of age, income, or credit history.

What are short-term loans?

Short-term loans are regular loans with a short repayment period, ranging from six months to two years. The funds are deposited into your bank account as a lump sum and paid back monthly, consisting of a part of the principal and the interest rate. 

You can find four types of short-term loans that Canada has to offer. 

  • Short-term installment loans: These short-term loans can refer to any traditional personal installment or online loans. The borrower pays the full loan amount in equally divided installments with interest, usually across a year or two. Shorter repayment terms can also lead to lower interest charges over time. 

With an unsecured short-term installment loan, borrowers must have a strong financial background and credit history to qualify. This can make it harder for borrowers with less than stellar credit to qualify and afford the higher interest costs of short-term loans. 

  • Credit card cash advance: A credit card cash advance is the quickest short-term loan available. Depending on how much extra room you have with your credit card, you can withdraw cash from your line of credit by simply inserting your card into an ATM and selecting a cash advance. 

Because of the convenience, banks charge a cash advance fee for every transaction, which can be a percentage of the cash advance amount or a flat fee. Credit card cash advances also have high-interest rates of more than 20% and will accrue interest immediately. 

  • Payday loans: Payday loans or payday cash loans are unsecured loans that can provide quick cash of up to $1500. The average repayment term for a payday loan can even be shorter, ranging from one to two weeks. As the name suggests, they are designed to be repaid by your next payday.

With payday loans, lenders require proof of income to determine eligibility. Once approved, funds are typically deposited in a day or two and are repaid through a pre-authorized debit from your active bank account when your loan payment comes due.  

There is no credit history check with a payday loan, which means it is suited for borrowers with poor credit and low incomes. However, a payday loan has very high interest rates compared to a traditional short term loan and credit card cash advance, with an annual percentage rate of 442%. 

  • Home equity loans: Home equity loans are secured loans where borrowers can find lower interest rates than traditional unsecured loans. They allow you to use the existing equity in an asset you already own to pay for expenses that would have required you to dig into your own savings. Since repayment terms usually last two years, home equity loans can be considered short-term loans.  

Home equity refers to the current value of your home minus the outstanding amount owed in your mortgage. With continued monthly payments, you build more equity. Your home will also naturally gain more equity over time as it increases in value due to market conditions. The greater your equity, the more funding you can access. 

Applying for a short-term loan 

You can unlock your home equity and access it as a lump sum amount to buy a car. If you’re a homeowner, home equity loans provide a great source of financing because interest rates tend to be lower than unsecured loans, it’s flexible and the qualifying criteria are less stringent.  

This kind of loan depends more on how much equity you have built in your home rather than your credit score or income. You can calculate how much equity you have by subtracting your outstanding mortgage balance from the house’s appraised value.   

If you’re unable to meet the car loan requirements of traditional banks, you may consider home equity loans from alternative lenders like Alpine Credits.

An agent and client having a meeting.

Benefits of short-term loans

Here are the main benefits of short-term loans: 

  • Quick access to funds: Short-term loans have faster approval rates than long-term loans. 

If you decide on online short-term loan lenders like Alpine Credits, you can experience a simple and fast application, approval, and funding process to cover your needs, all from the comfort of your home.

  • No long-term commitment: Since short term installment loans are repaid over a year or two, you are not tied to lengthy repayment terms that can accumulate larger interest costs over time. With a shorter commitment, you are less susceptible to changes in your financial situation than with long-term commitments. 
  • Lower interest cost: Homeowners who are eligible for short-term home equity loans can experience lower interest rates and higher funding potential compared to getting loans without a security against them.  
  • Flexible repayment: A short-term loan can have a flexible repayment plan, which can be adjusted based on your financial circumstances. Depending on the short-term loan agreement, fees can be associated with renegotiating your repayment terms. 
  • Potential for credit improvement: A short-term loan can also accommodate individuals who need an alternative to traditional loans due to bad credit. With a short-term loan, these individuals can get a practical solution to their financial needs without credit evaluation. Some lenders may even report to credit bureaus, so showing your diligence in repaying can reflect well on your score. 

The best place to get a short-term loan

Many lenders in Canada can provide short-term loans, from traditional financial institutions like banks and credit unions to alternative lenders like Alpine Credits. 

With over 50 years of experience in alternative lending, Alpine Credits can provide homeowners with the funding they need for any financing and any length of term, long or short. Homeowners get approved regardless of their credit score, employment status, or income.

With a home equity loan, the higher the equity built, the higher the potential funding for a short-term loan. Here are what you can do with a short-term home equity loan: 

  • Make renovations and improvements: Extensive projects need financial support, and one way you can find it is by accessing the value of your equity as a loan. Not only will you have enough funding for most renovations, you’ll also further increase the value of your property. 
  • Buy additional property: Whether you want to generate rental income or have vacation property elsewhere in the country, a home equity loan can help you with the down payment.  
  • Launch a business: Starting your own entrepreneurial endeavour requires sufficient financial resources and a thorough plan. With a home equity loan, getting approved for a loan to cover the initial expenses only requires you to have built at least 25% equity in your home.

Will applying for shortterm loans affect my credit?

As with any financing, applying for short-term loans can require a credit check, which may cause your credit score to drop a few points. Traditional lending institutions refer to your credit score to gauge your creditworthiness. 

Although only one inquiry will not likely have a significant impact, multiple applications within a brief period could damage your credit. That is why it is crucial to be selective with applications and minimize hard inquiries, ensuring you are eligible for the lender’s criteria before applying for a loan.  

Regardless of what type of loan you get, paying on time will impact your credit score positively. Missed payments or defaulting on short-term loans will cause your credit score to drop every time. 

Home equity loans as short-term loans 

Applying for a loan at Alpine Credits starts with three simple steps:  

  1. Apply online: Answer a few simple questions to see how much you qualify for. There’s no obligation, and it won’t affect your credit score. Unlike traditional banks, all you need to qualify for a loan at Alpine Credits is to own your home.
  2. Get approval: Once qualified, one of our lending specialists will help you customize your loan details. During this step, it is essential to present some documents, which include identification, proof of income and your property and mortgage information.
  3. Receive funding: Review and sign the loan agreement once the application is approved. Funds are deposited directly into your active bank account within a week.

As mentioned, a home equity loan allows you to take out the equity you’ve built in your home without selling your property. You can then use this capital to help you meet your financial needs. Here’s how it works: 

home equity loan equation from Alpine Credits

Getting a home equity loan can help you meet your financial needs. The funds can be used for various purposes and fit your short- or long-term goals. Short-term goals can be as simple as renovating your home or covering medical bills, while long-term goals can be building your retirement funds or investing in your new business. 

Frequently asked questions

There are a lot of options to borrow money instantly in Canada, from banks and credit unions to alternative lenders: 

  • Banks offer cash advances from a credit card’s line of credit but with added fees and no grace period for interest. 
  • Payday lenders can provide quick cash but impose even higher interest rates and hidden fees. 
  • Alternative lenders like Alpine Credits offer home equity loans that can cover short funding needs using the available equity built in your home.

While Canada short term loans come in various forms, consider a home equity loan if you are a homeowner. They are a more straightforward solution when you have poor credit or need to cover expenses requiring immediate funding.

A short-term loan can benefit someone who wants to manage their immediate financial needs, avoid long-term debt obligations, and improve their financial flexibility. However, not paying a short-term loan can lead to financial consequences that could impact your credit, causing fees to pile up and making your financial situation even more challenging.