Having bad credit in Canada can leave you in a tough spot. For example, banks can refuse to let you take out a loan. If you are having difficulties getting some loans with bad credit, you should know that you are not alone; over one million of Canadians have bad credit, which leaves them with no opportunity to get approved for credit—some people cannot even get a job due to this problem. Furthermore, borrowing money can be problematic if you have bad credit. There are some lenders that do provide long term loans with bad credit in Canada.
Alternative Lenders
While bad credit leaves many people scratching their heads, we have some good news to tell: aside from banks, there are some alternative lenders who accept to give long-term loans to Canadian citizens with bad credit. These private lenders allow you to pay back your loan in a long term —the longest repayment term you can ever ask for on a bad credit long-term loan. Though being accepted to take out some loans is a great advantage itself, you should expect some cons of taking out personal loans with bad credit in Canada.
Banks Are Not The Only Lenders in The Business
Again if you are thinking of giving up because banks have refused to lend you money, you should first lend us your ears: banks are not the only ones offering loans to Canadians with bad credit. In fact, private lenders will give you greater advantages than banks. Then consider the following differences between banks and alternative lenders; they are key to making a good decision as to what kind of lender you should borrow from.
- Alternative lenders will accept your personal loan application even when you have bad credit; most banks will decline your loan application when you have a bankruptcy.
- Many alternative lenders online don’t keep up expensive brick and mortar branches. So, they will let you borrow money even when you have bad credit—they may charge different rates.
- Alternative lenders in Canada will give you access to both unsecured and secured bad credit long-term loans.
- Because private lenders are taking a great risk by letting you take out bad credit personal loan, they will charge you higher interest rates and fees.
Things to Consider when Applying for Long-term Loans with Bad Credit
Even though the private lenders offering bad credit loans don’t always check your credit score, they do inquire about some areas of your financial life. That helps them decide whether or not to approve your bad credit loan. As you submit your loan application, you should then be prepared to answer the questions that they are going to ask you; they will want to know the following:
- The lender will ask if you are employed or are running some business;
- Typically, they will want to know how much you earn a month or a year;
- Next, they will ask whether there is someone you can co-sign your loan;
- Further, they will be interested to know whether you have a bankruptcy or some debt.
Advantages of Bad Credit Long-term Loans in Canada
You may be wondering, “What could be the benefits of bad credit long-term loans?” Well, there are some benefits, as follows:
Bad Credit Loans Let You Rebuild Your Credit Score
If some private lender accepts your personal loan application and you succeed to make all your repayments on time, you can then work toward moving your credit score back up.
After improving your credit score, your lender can offer you unsecured credits. In case you are wondering about the unsecured loans, they are loans on which you don’t need to use any collateral as a security for the loan. So, you will not lose any of your goods even if you can’t keep up with your repayment. Instead, you may get better rates in the future.
Bad Credit Long-term Loans Give You Access to Better Interest Rates
Though you should expect to pay higher rates on bad credit long-term loans, some alternative lenders accept to help Canadians by charging them lower rates. All you need to do is keep an eye out for such opportunities.
Bad Credit Personal Loans Let You Borrow Larger Amounts of Money
Perhaps being able to borrow as much money as you need is one of the greatest advantages of bad credit long-term loans. Yes, you can borrow a large amount of money in a very short time, so you can consolidate other debts or small loans and even handle some emergency expenses. Here’s a video we found on ways to fix your credit report:
Disadvantages of Bad Credit Long-term Loans
As you might have already seen, bad credit personal loans also carry with them some disadvantages; the biggest problem here is that some private lenders online are both unprincipled and unreliable. In order not to regret applying for a bad credit personal loan, you should first consider checking the following:
Interest Rates
Before you apply for your loan, you need to check the maximum rates that your private lender charges or you will be forced to pay exorbitant interest rates. What bad credit loan borrower would ever want that?
Fees
Once your private lender accepts your loan application, you may become too excited and forget the most important thing; that is, the fees you will have to pay after signing on the loan. So, you need to remember to read all of the fine print and to check for hidden fees before you sign on the bad credit loan.
Penalties
Another thing you need to consider before signing on a bad credit long-term loan is the penalties you may have to pay if you miss a payment, pay later than expected, pay your loan off earlier than anticipated or prepay your loan amount.
Credit Reporting
Sometimes lenders forget to report to credit agencies when borrowers pay their fees. So to avoid this setback, you need to ensure that your private lender always reports to the credit agencies whenever you pay your loan amount.
Final Thoughts About Long Term Loans With Bad Credit in Canada
Overall, long-term loans with bad credit can be a great tool for rebuilding your credit score if you find a reliable private lender who charges affordable interest rates and fees. If you are in need of a loan, long term loans with bad credit in Canada could be an option.
