A personal loan is a type of loan, which is extended for personal use, thus establishing consumer credit. Personal loans are of the unsecured variety in most cases, but this is based on the applicant’s integrity. Personal loans can be used for various purposes – for household repairs and extension, or for medical, family (vacation, education), and other uses, as opposed to commercial or business uses.
Unsecured personal loans are also known as signature loans to be repaid over a fixed term. They are extended based on the applicant’s ability to pay off the loan and his credit history. Personal loans normally come with higher interest rates, which can be explained with the shorter repayment period.
Personal loans vary when it comes to terms and conditions, amount offered, and applicable fees. The type and amount of financing varies from one lender to another. The good news is that in Canada, there is a wide variety of institutions offering personal loans. Scotiabank, for example, offers personal loans based on the client’s schedule and budget. Unsecured loans are offered in the amount of up to $50,000, and the amortization period is up to 5 years. Loans give payment flexibility in that they can be repaid without penalty and at any time.
The loans offered by Scotiabank also come with consistent monthly payments so that borrowers know what they are spending every month. Interest rates remain fixed over the term of the loan. Another bank to check with is the Canadian Imperial Bank of Commerce, which offers personal loans with terms ranging from one to five years. The minimum amount is $3,000 and can be used for loan repayment or for specific purchases. Borrowers can use the money to consolidate high-interest debt, to take a vacation, make an investment, buy furniture, or for anything else. The monthly payment amounts are set which makes budgeting easier. The loan may be unsecured or secured
, i.e. secured against some asset of the borrower or the equity in his home. No penalty applies for repaying a portion of the loan earlier, and borrowers can make frequent payments as to reduce the interest costs. Faster approval is guaranteed if applying online. Clients of the bank who opt for a secured loan enjoy a lower interest rate and a higher credit
limit to be used for a vacation property, renovations, or other major purchases.
Those who prefer to shop around
can check with other financial institutions, one option being the Bank of Montreal. The bank offers personal loans
starting at $5,000. Clients can choose from weekly, monthly, or bi-weekly fixed payments and a variable or fixed rate of interest. The term ranges from 1 to 5 years; however, based on the borrowing purpose, the repayment period can be longer. Clients can make additional payments, and no penalties apply. Twice a year, they are allowed to defer one month’s payment. Creditor life or disability insurance plans are optional features offered with personal loans
. Clients who fill out the online application can apply for up to five financial products, among which homeowner’s and personal line of credit, personal loan, and mortgage. To apply, it is recommended to have your personal and financial information on hand, including your rent and monthly housing expenses, your monthly income and outstanding balances, as well as the value of any savings, investments, properties, and vehicles.