The Many Uses of a Personal Loan in Canada

Borrowing money can help in many ways. Personal loans are one of the most flexible types of loans you can borrow from a lender. Understanding more about your loan, but also how you can use it will help you make the most informed decisions.

A personal loan is an ideal loan for many reasons. The flexibility of the loan is one of the biggest reasons. Consumers like to be able to cover certain expenses as they arise, and with a personal loan; they’re better able to do this.

Personal loans are ideal for a number of reasons, and we’ve gathered some information on them here. Read on to learn more about these loans and why they’d be a great addition for any financial needs you have.

Borrowing a Personal Loan

A personal loan is a flexible loan amount that is borrowed from a lender. It is a large lump sum that is paid back over the course of a few years once borrowed at an agreed upon monthly amount, including any fees and interest that the lender might charge for borrowing the money from their institution.

These loans are sometimes called consumer or installment loans. Most personal loans can let you borrow up to $50,000 and have a repayment term of up to 60 months. These loans are available from a number of traditional lenders, banks, and other financial institutions.

Generally, a payday loan lender is not who you should work with for an actual personal loan. Be careful of these companies that promise personal loans but are actually high interest payday loans.

In order to borrow a personal loan, you will have to have the following proof to provide the lender with:

  • Regular income 
  • Bank account 
  • Permanent address 

You will also have to allow them to run a credit check to see if you qualify for the loan amount. They will check to see how able your ability is to pay back the loan, as well as many other factors before approving or denying the loan application. Your debt, credit score, and report will all play a factor in whether you’re approved for the loan or not.

Borrowing the Right Amount

The lender might tell you that you can borrow a large amount, but it is important to know how much you actually need to borrow. Determine what you want to purchase with the personal loan, and then borrow just that amount. This way, you have the right amount and a comfortable amount to pay back.

Consider the monthly payment you will have to make to pay the personal loan back. This amount should be something you’re comfortable and confident in paying back. Budgeting is all that is needed to see how much you could safely afford to borrow.

Using a Personal Loan for Multiple Uses

If you are looking at obtaining a personal loan for multiple uses, you may wonder if this is something you can do with the money. You are able to use the personal loan however you’d like, without having to worry about being limited to what you can spend the money you’re borrowing on.

You can even borrow multiple personal loans from multiple lenders, if they all approve you with a good credit and debt score and report. Lenders will stop allowing you to borrow this money after a certain point, too. This is something to think about, as well as your ability to pay back the money you’re borrowing from these personal loans.

Other Uses of a Personal Loan

There are many uses that you can use a personal loan for. Depending on the needs you have, going with one use over another is ideal. Here are some of the more common ways that a personal loan is able to be used.

  • Consolidate debt to pay off your bills
  • Cover moving costs 
  • Home repairs and renovations
  • Cover any emergency expenses, whether planner or unplanned 
  • Funeral or other end of life expenses 
  • Make a very large purchase 
  • Wedding costs
  • You’ve lost your job or have cut hours and need to pay for expenses 

You’re easily able to use the personal loan however you’d like to use it. There are no right or wrong ways for you to enjoy the benefits of a personal loan and all that comes from using it. Additionally, you can benefit from the many extras that come from paying down things, such as using a personal loan for debt consolidation. A better credit score would be just around the corner with a personal loan.

Find the loan that works with you and the needs you have. A personal loan might be the best choice for whatever it is that you need to finance. Find out more about them when speaking with a personal Canadian loan lender.

Frequently Asked Questions About The Many Uses of a Personal Loan in Canada

Can I apply for a personal loan again once I am denied for the first time?

Yes. You can apply again once you fix the reason why you were denied in the first place. Once this is fixed, you will likely be approved for the loan. Asking the company what you need to fix to be approved can also be an ideal way to start on the process of fixing the issue to obtain the personal loan.

How much money will I be able to get from this personal loan?

Most lenders offer loans up to $50,000, but sometimes you can find other loans up to $100,000 depending on the lender. However, how much you’re approved to borrow will go off of your credit history and score, as well as other factors such as your income.

The amount you’re offered to borrow will be told during the application process.

Will I know the monthly payments I am responsible for when I am approved?

Yes. The lender will go over the paperwork with you, the monthly amount, how it will be paid, and your responsibilities for borrowing this money. This is important to ensure that you are paying your loan back on time, every month.

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Amanda Leach

Fifteen years can be a long time to work in one industry, but not when you are doing something that you love. Amanda has enjoyed the freedom of working as a freelance writer for the majority of her career. She has successfully combined her passion and skill for writing while still enjoying a life filled with travel, learning and exciting new experiences. While she loves exploring all different types of writing, her PhD in Consumer Psychology has made her a sought after writer for marketing, business and technology fields. Amanda is a regular contributor to Smarter Loans.