Need money in a hurry? A personal installment loan may be your solution.
Personal loans in Canada can be as low as $100 or as high as $50,000, with terms ranging from six months to five years.
These loans, also called installment loans, may help you meet your financial goals. They can help you make big purchases, cover unexpected bills, or consolidate debt. Debt consolidation involves getting a loan to pay off several small loans.
A personal installment loan might be right for you, but what does this kind of loan mean for you? Let’s explore personal installment loans.
Personal Installment Loan
A personal installment loan is a closed-end loan, meaning your lender will give you upfront cash. Then, you’ll repay the loan in set amounts over several months or years.
Your payments will likely remain the same during your loan term. Your loan term is how long it will take you to repay the loan.
If you make timely payments and repay the loan, your lender will likely report this to today’s Canadian credit bureaus. This may boost your credit score.
Loan Application Process
Ready to apply for an installment loan? Many lenders will consider several factors to determine your loan terms and interest rate. These factors include the following:
- Bank transactions
- Debt
- Income
- Credit reports and score
Some personal loans come with fees. Shop around to compare different personal loan options and choose the best option for your needs.
Missing a Loan Payment
What happens if you can’t make an installment loan payment? Reach out to your lender right away to find out what your options are. These might include a viable payment plan, deferment, or forbearance.
Deferment is when you postpone your loan payments to a later date. Forbearance is where you temporarily postpone your loan payments. Both of these options may help you avoid defaulting on your loan.
A payment plan may allow you to make partial loan payments. Your lender might also lower your loan’s interest rate to reduce your monthly payment amount.
If you refuse to repay your installment loan, the lender might try to collect what you owe through a debt collector. Your credit score may also drop if the lender tells the credit bureaus you’ve missed payments. These missed payments will appear on your credit history, and this might hurt your chances of getting credit later.
What happens if your lender tries to withdraw money from your account to cover a payment and the account is empty? You’ll probably be charged a fee for not having enough funds in the account.
If you still don’t repay your installment loan, the lender may file a lawsuit against you to recoup what you owe them.
Installment Loan Benefits
A major benefit of installment loans is that they can help you cover an emergency expense. These loans will give you quick access to cash.
Another reason to choose an installment loan is that it comes with predictable repayments. This makes budgeting easier.
Keep in mind that the U.S. interest rate might fall or your credit score might rise over time. In this situation, you may be able to refinance.
Refinancing may shorten your loan repayment schedule or lower your payments. You might have to pay a refinancing fee, but the savings you may experience from refinancing might make it worthwhile.
An installment loan may quickly increase your credit score, too. The credit bureaus look more favorably upon installment loans versus credit card debt, also called revolving debt. That’s because revolving debt can be hard to control if not used carefully.
Installment Loan Drawbacks
A drawback of an installment loan is that you can’t increase your loan’s size if you discover you’re short on funds.
Another disadvantage of a personal installment loan is that it may come with a long repayment term. Prepare to consistently make a monthly payment for several months or years.
Plan to pay off your loan early? That may be a problem with some installment loans. Read through your loan’s terms to make sure there aren’t any prepayment penalties.
Keep in mind that an installment loan may be too expensive for you if you have a low credit score, so study your budget carefully before accepting a loan. Low credit scores may lead to higher interest rates, which translates to more money paid over time.
Your Credit Score
An installment loan may affect your credit score.
Some installment loans aren’t reported to Canada’s credit bureaus. If yours is, this may cause your credit score to dip since the loan will increase your overall debt amount.
Your score might also drop temporarily since applying for installment loans may trigger hard credit inquiries. A hard inquiry happens when a lender asks to look at your credit report when you’re applying for a loan.
As long as you make your loan payments on time, your credit score will gradually increase over time.
How We Can Help
A personal installment loan is a loan where you receive funds from a lender upfront. You’ll then repay the loan in a set amount each month for the next few months or years.
At Kingcash, we offer top-quality installment loans ranging from $500 to $750 in Canada. Our lending services are quick and simple to use. Once you’re approved for a loan, you can pay the loan back in three, six, or 12 installments, depending on what’s most fitting for your budget.
Get in touch with us to find out more about our loan process, and get funded today!
