Some of the most popular types of unsecured loans in Ontario are payday loans, installment loans and personal loans. Each of these options is more suitable to different types of consumers and based on what you might qualify for. Your eligibility for the different types of loans in Ontario is primarily based on your credit profile and score. The higher your credit score, the more likely it is that you will be approved for a loan with a lower interest rate.
Payday loans in Ontario are usually a last choice for borrowing due to the higher interest rates, but if you have poor credit and need fast funds, many will choose this option. A payday loan is easy to qualify for and a quick way to get fast funds for just about anything.
The maximum amount to borrow with payday loans in Ontario is $1,500. Lenders of payday loans usually do not use traditional credit checks as the borrowers of this type of loan. But they will use alternative data and other means to review your loan request when considering your application.
Note that lenders of payday loans can not provide you more than 50% of your net monthly pay as a single loan. The typical term of a payday loan is usually between 14 to 28 days and the maximum term is 62 days. Charges are $15 for every $100 borrowed.
Payday loans in Ontario are more common with poor credit scores of around 600 or less and an option for those when most other lenders wouldn’t consider their loan request.
Installment loans in Ontario are a common option for borrowing that usually permits up to about $10,000 (depending on the lender) with terms from a few months to a few years, with the typical interest rate being between 20% to 47%. The actual rate your loan might have will depend on the lender, along with your credit score. Lenders of installment loans are more likely to look at a borrower’s credit score than payday loan lenders.
Eligibility for installment loans is often dependent on a credit check along with meeting certain criteria such as meeting minimum income requirements, minimum age requirements, along with having an active checking account and using the instant bank verification (IBV) process. In addition to interest, installment loans can be subject to origination fees, early repayment fees and late payment fees.
Installment loans in Ontario are more common with fair credit scores of around 600 to 700 on average.
Personal Loans provide borrowers with better interest rates and APR than installment loans and payday loans. These can be found at banks and credit unions (often more difficult to qualify for) along with online lenders, which can be an easier and faster process.
Personal loans are usually reserved for those with good credit scores, which means reduced risk to the lender, and have interest rates anywhere from 5-10 percent and probably up to 20%. The more that is requested and the longer the term, the more challenging it can be to get approved for a loan.
Personal loans in Ontario are more common with good credit scores of low 700s or higher.
Applying for Loans in Ontario
Common requirements for qualify for a loan include:
- Must be at least 18 years old (19 in some provinces)
- Must be a resident of the province the lender is licenses to operate in
- Must meet the lenders minimum income requirements
- Must hold an active Canadian bank account (older than 90 days for most)
- Must provide a valid physical address within Canada, along with phone and email
Many lenders also require that they can access your bank account with their instant bank verification (IBV) option. This is required for identity verification, along with being necessary to work with their loan process.
Alternative Income Source to Qualify for Loans
Lenders will have different types of income sources that allow you to qualify for online loans, but not all require steady employment. Some lenders will permit the following income sources such as benefits to be eligible for different types of loans in Ontario. This is not conclusive, and some lenders might include other options in addition to what is listed below.
With most lenders, any income must be deposited directly into your bank account in order to work with their loan process.
Before You Borrow
Before you take a loan there are a few recommendations we offer worth considering.
- Can you afford the loan payments?
- Is the lender licensed in Ontario?
- Is the lender in good standing?
- Do they charge more than $15 for every $100 borrowed?
- Are there late fees, and what is charged if not paid back on time?
Using responsible borrowing habits can help you with making smart financial decisions that can help you avoid a debt spiral in the future. Ensure that when borrowing that you are aware of costs, fees, and only borrow what you can afford for bi-weekly or monthly payments.
While the overall cost to borrow is high, for those with real emergencies and limited options will consider e transfer payday loans for their quick processing and access to funds.
It is worth noting that when you borrow, some often choose longer terms when available as an option. When selecting longer repayment terms, you are paying more in interest. It is best to go with the shortest repayment terms that fit your budget to reduce the amount of interest paid.
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