How Are Personal Loan Interest Rates Calculated?
They are calculated through a combination of borrower-specific (income, credit score, assets etc.) and macroeconomic (central bank rates, inflation) factors. Interest rates (APR) on personal loans can be as little as 4% but can go up to 40% and more.
Can I Pay Off a Personal Loan Quicker than the Life of the Loan?
Typically, personal loans do not come with prepayment penalties. However, it is important to confirm that with the lender prior to prepaying the loan. If the lender allows this, the benefits of prepayment could include lower interest costs over the life of the loan.
What Do I Need to Get a Personal Loan in Canada?
While different lenders will have different requirements for minimum credit scores, credit history and income levels, the baseline requirement for borrowers includes Canadian residency, steady employment, being 18+ years of age, and having a Canadian bank account.
How Much Can I Borrow Under a Personal Loan?
The precise amount depends on whether the borrower is willing to put up asset collateral, as well as the level of income and credit history they possess. Personal loans are typically between $500 and $10,000 but can be much higher.
What Is the Difference Between Secured and Unsecured Personal Loans?
Depending on the purposes of the loan and the profile of the borrower, both have individual merits. With unsecured loans, the borrower does not have to risk any personal assets such as their vehicle or even their home, in the event they cannot repay the loan. However, the interest rates are typically higher on unsecured loans, and they are smaller in size, due to the extra risk for the lender. Secured loans, on the other hand, such as car title and home equity loans, use the borrower’s assets as collateral. This makes the loans less risky for the lender, and the borrower can take out a larger sum of money at a lower interest rate.