Owing debt is a normal part of life for many people. Most of us had to finance the cars, houses, and other assets we own. However, it may surprise you that the average Canadian owes nearly $1.85 for every dollar of disposable income they have. Getting fast loans can be a great way to pay off outstanding debts, but not everybody understands how fast loans in Canada work.
Listed below is a breakdown of the key information you should keep in mind before applying for quick cash. Let’s get started.
What Is a Fast Loan?
As the name implies, a fast loan is a form of financing that aims to disburse funds as quickly as possible.
They’re typically for small amounts of money, often between $500 and $750. These loans are available in a variety of options, and some of the most common are pawn shop loans, payday loans, and car title loans.
How Does It Work?
Acquiring this type of financing isn’t any more difficult than taking out a regular loan. In fact, it’s often easier in most cases. Since these loans are for small amounts, there aren’t many barriers to entry.
To clarify, you won’t have to worry about a lender conducting a comprehensive investigation of your financial history. In general, interest rates on fast loans are substantially higher than those of conventional financing options. This is simply due to the fact that repayment periods are short and fast loans are for smaller dollar amounts.
To take out a fast loan, you first need to submit an application. Most lenders require you to have a bank account, show proof of income, and be at least 18 years old. It’s possible to find a lender in person or online, making the process convenient.
You’ll then need to review the loan terms and agree to certain factors. This includes the amount borrowed, the repayment period, and the interest rate. If you apply for online loans, you may need to authorize a bank account for the lender to provide your funds.
After approval, you’ll receive a lump sum of cash. Those who apply online may get a direct deposit into their bank account.
Afterward, you simply need to repay the loan by the due date. For most loans, this is often around two weeks.
This will vary between lenders, though. In the event you can’t repay the loan in time, some lenders allow you to extend your repayment period for a fee.
Who Is It Best For?
Fast loans are ideal for people who need money as soon as possible. You might be in between paychecks, or you may need to satisfy a creditor in the near future.
They’re also a great option for people with bad credit. Poor credit scores can impair your ability to secure traditional types of funding.
Put simply, fast loans are great for anyone who needs money immediately and is willing to accommodate high interest rates and short repayment periods. Regardless of why you borrow money, just be sure you only borrow what you can pay back.
Getting Started
It’s crucial to find the right provider before you take out a fast loan. Otherwise, you could find yourself in an unfavourable situation.
This can involve strict loan terms, exorbitant interest rates, etc. When searching for a provider, look at their past reputation to see what others had to say.
Only choose someone who has a large amount of positive feedback. It’s also crucial to look into their loan terms and interest rates. The last thing you want is to take out a loan that makes your financial situation more complicated.
Beware of predatory lenders. These seem like legitimate companies but aim to scam consumers by stealing their financial information.
There are also shady lenders who use convoluted verbiage in their agreements to charge borrowers more than they expected. As long as you do your due diligence and look for a reputable provider, you shouldn’t encounter issues.
Once You Get Paid
After you receive your loan, it’s recommended to use it for what you needed and pay it off as soon as possible. As previously mentioned, interest rates are higher than normal fast loans. So, even if the repayment period is short, you can minimize the amount you accrue in interest by paying it off sooner than later.
A great way to do so is by reducing spending in other areas. You could cook more meals at home, avoid unnecessary purchases, etc.
You can also look for ways to generate additional income. It’s not uncommon for those who borrow quick loans to pick up an extra shift at their job or sell unwanted possessions. Regardless of how you need to do it, striving to pay off your loan quickly will eliminate potential financial problems.
You can repay your loan debt in various ways. One of the most common is through an online portal on the vendor’s website.
You can also write a check or issue a direct debit from your bank account. If you don’t adhere to the loan terms, the lender can sometimes electronically withdraw money from your bank account.
Does It Impact My Credit?
Since fast loan lenders don’t require credit checks, no information about this loan will show up in your credit report. This means that borrowing a fast loan and paying it off won’t help your credit score.
This also means that they can’t hurt your credit score. However, if you default on your loan and the lender sells your account to a collection agency, you could experience credit score issues.
This occurs due to your outstanding debt being reported as a collection account to credit bureaus. This shows other lenders that you may not be reliable when you borrow money.
Borrow Fast Loans Responsibly
Fast loans can be a great way to get cash when you need it. Just make sure you borrow responsibly to avoid financial difficulties you may have otherwise encountered. From here, you can get back on track as soon as possible.
Apply for a new loan today at EasternLoans. Our professional staff is ready to help guide you through the process.