When looking for a loan it becomes apparent very fast that not all loans are created equal. With different requirements and rates its always to do some research before committing to a loan. There are several types of loan available in Canada. To find out which one fits your needs we have compiled them below with their advantages and disadvantages.
A mortgage loan typically issued for big purchases like a house, apartment, business or even big equipment. The payment terms on this type of loan range between 5- 25 years. Mortgage loans are generally issued by the big banks and require a lot of detailed information about your credit history. The advantage of this loan is that there are highly competitive rates out there.
Short Term Loans
This type of loan is a boost to get you to your goal, without the long-term commitment. Terms are usually between 12-24 months and are for a smaller dollar amount than a mortgage loan. This type of loan is pretty easy to get from different lenders. You can take the longest payment term to reduce the monthly installments or you can choose to pay it off faster and build your credit faster.
It is called a Secured loan because the lender must secure collateral, like a house or car, in order to cover their loss if the debt is not repaid. These types of loans are attractive because they have low-interest rates but can often take a longer time for approval as the collateral needs to be evaluated.
Make sure when considering a secured loan that you budget carefully so that you can repay it. If you don’t you risk losing your property.
An unsecured loan has higher interest rates because they don’t need collateral, therefore the lender is taking on more risk that you may not pay back the amount owed. Car loans, small lines of credit, and bad credit loans can all be unsecured loans types.
The application is easy, and approval is usually fast, you just need to show a steady income and that you haven’t defaulted on prior loans.
If you are finding hard to pay off all the different payments, a consolidation loan might be the right one for you. This loan collects all your debt and you make one payment. The interest rate tends to be lower so that you can manage payments over a longer.
Whatever loan you go with it is crucial to budget for the full term of your loan so that you can pay it off and have enough to pay all your monthly bills.
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