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What types of personal loans are available in PEI?
The average consumer debt in PEI is $23,254, and this is typically spread across several different forms of borrowing, as all types of loans are available across the province. For example, the average Islander carries $2,276 in credit card debt, $2,753 in student debt, $15,304 in other types of consumer debt, plus $45,064 in mortgage debt. And these headline numbers do not detail all of the possible options, such as auto loans, bad credit loans, lines of credit, and debt consolidation loans. With so much choice, it’s important for borrowers to understand what type of personal loan they need, before they begin loan shopping.
What can a personal loan in PEI be used for?
Key to understanding what type of loan you need is understanding what you need it for. There are loans for all needs and that can be used in many different ways. For example, if you have a specific need (like a new car), then a loan dedicated to that need (like an auto loan) is a good bet – but it must be used for that one purpose. There’s no point borrowing money via an auto loan if you need cash for a utility bill. There are a few personal loans in PEI like this (debt consolidation loans are another good example), but not all have restrictions on use.
Most personal loans are much more general – they can be used for almost any expense. This includes cost of living (although PEI is the cheapest province to inhabit in Canada, some still struggle to find the average $1,615 needed to live per month), emergency expenses, discretionary purchases, tuition fees, and so on. Installment loans, online loans, lines of credit and payday loans are all open for use in any way the borrower sees fit.
How much can I borrow with a personal loan in PEI?
Personal loans in PEI can range from $300 to $35,000 on an unsecured basis; more may be available to the most qualified borrowers, or to those using secured loans. The exact amount any individual person can access will depend on their financial circumstances, the loan they apply for, and the lender they apply to.
How do I qualify for a personal loan in PEI?
Every lender in PEI has their own rules about how to qualify for their personal loans, and because of this it’s impossible to pinpoint an exact list of criteria that everyone must meet in order to get any loan. There are however some commonly used factors that most lenders at least look at. This includes:
- Income level. There is no single income level that all lenders require. Instead, most simply want to ensure that the loan you are asking for is affordable for you. This is helpful given the wide disparity across the province: while the average yearly salary in Charlottetown is $46,160, across the wider region it is significantly less.
- Income type. Although employment income is considered the standard for most loan applicants, there are plenty of lenders who accept borrowers with different types of income. This is good news for the 7.1% who are unemployed, 5.7% receiving social assistance, and 20.6% over the age of 65.
- Credit. Not all loans require a credit check, but among those that do, you can expect to need a minimum credit score of anywhere between 560 and 650, depending on the rules of the lender. Bad credit and no credit check loans are available for those falling below 560.
- Existing debts. As part of the effort to ensure a new loan is affordable, lenders frequently assess existing debts (and other financial obligations). Those with already-stressed budgets may find it harder to qualify for new loans, or for large loans.
Qualifying for a loan is a matter of choosing your loan type, loan size and lender wisely. There are options for everyone, no matter their financial position.
How can I make a personal loan more affordable in PEI?
Islanders generally manage debt better than other Canadians (PEI’s delinquency rate is just 1.09%) but everyone could stand to save some money, and getting the best interest rate on your loan is one surefire way to do this. Here are some pointers to help you access the lowest rates possible:
- Shop around; all lenders have their own rates and algorithms for calculating the rate they offer each borrower.
- Offer collateral; secured loans usually have lower rates than unsecured loans. A common asset used as security is the home; the average sale price of a PEI property is $403,987, and 68.8% of Islanders own their home).
- Get a guarantor; if your rates are high because of low credit, using a guarantor can help reassure lenders and lower your interest rate.
- Borrow less; you may qualify for a lower rate if a lender perceives the loan to be more affordable for you.
Improve your credit score; the higher your credit score, the better a loan deal you will be able to get.
Written by:
Amy Orr
Amy Orr is a professional writer and editor with over 10 years of experience in the Canadian, U.S. and U.K. financial markets. She has written for numerous publications on topics as diverse as economic literacy, corporate finance, and technical analysis of numerical data. Prior to transitioning to full-time writing, she worked in the hedge fund sector. Her academic background is astrophysics, and she has a Masters in Finance from the University of Edinburgh Business School.
Reviewed by:
Jenna West
Jenna West is Smarter Loans' in-house financial writer and content director. She has been covering the Canadian FinTech and finance industry since 2017, including financial trends analysis, industry surveys, regulatory updates and changes in Canadian consumer behaviour when it comes to finance.
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