Loan Articles


Unsecured loan or signature loan is a borrowing that doesnít have collateral. Most banking and financial institutions in Canada offer unsecured loans. Unlike secured loans which are granted against security (car or real estate), banks extend unsecured loans on the basis of oneís income and credit rating. Persons with steady incomes and good credit ratings have higher chances of being approved for unsecured loans. Because these loans donít come with collateral, they are granted at higher interest rates to compensate for the greater risks. Unsecured loans may be granted for various purposes such as home renovation or vacation. In addition, Canadian banks offer lines of credit that allow business entities to get financing which is not backed by collateral. Funding may be obtained for the purchase of office space or equipment, company car, etc.

Bank of Montreal offers various options for borrowing among which personal or unsecured loans. While no collateral is required, potential borrowers have to prove a solid history of timely repayments on previous loans. The minimum amount for unsecured loans is $5,500 and the repayment term is typically between one and five years, although it can be expanded in some cases. Interest rates are determined on the basis of oneís credit history and may be variable or fixed. The bank also offers insurance policy on the loan in case that personal issues make the loan repayment difficult.
Toronto Dominion Bank also grants personal loans, with conditions based on income, employment history, overtime, bonuses, and income coming from other sources, among others. In addition, the bank examines the borrowersí expenses, rent, mortgage payment, and credit history.

Canadian Imperial Bank of Commerce offers unsecured loans for home renovations and purchase of furniture, vacations, and investments, among others. Borrowers have the option to pay a part of the debt or the full amount at any time. As a further benefit, the bank reduces the interest rate for borrowers who make frequent payments. Repayments may be done monthly, semi-monthly, bi-weekly or weekly so that they coincide with oneís payment period. The minimum amount for unsecured loans is $3,000 and they come with variable or fixed interest rates. The variable rate is determined by the prime lending rate of the bank. In addition to unsecured loans, Canadian Imperial Bank of Commerce offers unsecured lines of credit for business entities. As part of the requirements, companies should have been in business for a period of more than two years and own a share of at least 20 percent. The borrowed amount should be between $100,000 and $250,000, intended to cover the purchase of equipment, to meet operating needs on a daily basis, or to boost seasonal cash flows.

Royal Bank of Canada also offers unsecured loans to individuals who plan to make an investment or need money to make small or large purchases. Loans come with fixed or variable rates and a wide array of repayment options Ė from weekly to monthly. The bank also offers unsecured lines of credit with a credit limit ranging from $5,000 to $50,000. Interest rate depends on the financial standing of the borrower. Bank of Nova Scotia offers unsecured loans of up to $50,000. The terms of loans vary between one and five years while rates are fixed, and payments donít change with rise in the interest rate.

Borrowers should always bear in mind that compared to secured loans, unsecured ones are typically more expensive. If unsecured loan is the only option, persons should first shop around rather than accept the first offer. It is better to compare the offers from several banking institutions. This may help in saving considerable amount of money in interest.