Bad Credit Loans in Alberta
What is Bad Credit? Bad credit is defined as any credit score below 600. This means that you are viewed as a higher risk to lending institutions. A bad credit score can make it more difficult to work with lenders, banks, landlords and even affect job applications. A higher score demonstrates that you have good […]
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What is Bad Credit?
Bad credit is defined as any credit score below 600. This means that you are viewed as a higher risk to lending institutions. A bad credit score can make it more difficult to work with lenders, banks, landlords and even affect job applications. A higher score demonstrates that you have good payment history and are an ideal borrower. A lower credit score means that you maxed out your credit cards, you haven’t paid your bills on time, you’ve missed payments, your debt to income ratio is high, you’ve defaulted on accounts, or you’ve simply applied for too much credit in too short of a time period.
Our Bad Credit Loan Application Process
What are Bad Credit Loans?
Bad credit loans are ones that allow you a loan on money with bad credit, that is, a score of 600 or less. Credit scores range from 300-900. A bad credit loan is for someone whose credit score isn't high enough to receive a loan from a traditional financial institution. Bad credit loans work the same way as personal loans. Individuals borrow money from these lenders and typically pay the loan back in fixed monthly installments. Most non-prime lenders will be able to overlook poor credit scores as long as they see that there is some positive payment history on the credit file within the last 6-8 months.
Types of loans you could potentially obtain with bad credit
This type of loan does not require any collateral as a way to secure it. Collateral is any asset you own such as a car or home. This means that collateral in your life is not at risk of being taken if you do not pay it back. These types of loans will be hard to get if you have bad credit history. The amount you can borrow depends greatly on how much you earn and your employment status.
This type of loan is the second easiest to be approved for with bad credit history provided you have an asset that is valuable enough to secure the loan. Secured loans tend to have high interest rates and are difficult to obtain larger loan amounts unless you already have a very valuable asset.
These are the smallest type of loans and last anywhere from two weeks to a month. They are meant to be used the same way as a missed paycheck. Payday loans are often incredibly high interest and do not report to either of the credit bureaus. They will be the easiest to get approved for however are very dangerous to use because of their high interest rates and inability to build your credit score.
Advantages and Disadvantages of Bad Credit Loans
- Easier and quicker process compared to obtaining a loan through a bank.
- There are many reputable online lenders that make it easy to get a loan quickly.
- You have the ability to improve your credit if you make payments on time.
- Great for emergencies.
- Bad credit loans don’t always require a credit check.
- If you secure your loan using collateral, you could end up losing this if your loan goes unpaid.
- Overall, bad credit loans have much higher interest rates. This is because it is riskier for lenders to provide bad credit loans. These, however, can vary between lenders.
- Your credit can get damaged further if you are not diligent with paying on time.
- If you have a cosigner, both of you could face financial penalties if one is not able to pay.
- There are more predatory bad credit loan companies compared to good credit loan lenders. You need to be careful in choosing who you borrow from. If going the online route for getting a bad credit loan, ensure you choose a site with reputable credentials and real customer reviews.
How Can You Get a Loan With Bad Credit?
If you have bad credit, you will not be able to go the traditional route for a loan straight through the bank that you use. Your personal bank will likely only provide loans to individuals with credit scores over 700-720. Instead, you will need to search for a reputable lending company that specializes specifically in bad credit loans. This will be your best bet towards obtaining the loan that you need.
To ensure you’re able to obtain your bad credit loan, you can have a few extra things that will make your chances go up:
- Have a decent, stable source of income and can make a monthly payment.
- Consider getting someone who has better credit to be your co-signer.
- Secure your loan using qualifying collateral.
- Adjust your debt-to-income ratio. A debt-to-income ratio lower than 36% is ideal to most lenders.
- Put down a down payment on the loan.
What’s the Easiest Loan to Get With Bad Credit in Alberta?
The easiest type of loan to get with a bad credit score would be payday loans or personal installment loans. Payday loans are smaller loans (typically up to $1,500) and are designed to get you through a missed paycheck until your next payday. Typically, you can borrow up to 50% of the expected amount of your next paycheck. Then, you’ll need to pay back both the loan amount plus the interest owed. However, payday loans do not help your credit score and can only end up damaging it if you do not pay them on time. You can fall into a “payday loan cycle” if you keep needing to take out these types of loans and borrow from these higher interest lenders.
Personal installment loans are loans in which you borrow a set amount of money and then pay back in smaller amounts called installments. These payments are set on a specific term and can be weekly, bi-weekly, semi-monthly or monthly depending on your pay frequency.
If you’re looking for the easiest lender to receive a loan from, choose a lender that provides secured loans or loans that allow you to use a co-signer. A secured loan means that you’ll need to secure your loan with collateral. This can be tricky because lenders will not accept assets that are still under financing or being leased such as vehicles. Very old vehicles will sometimes not count as collateral either. The collateral you provide needs to be completely paid off and owned by you; however, you’ll have a much higher chance of getting approved.
What Companies Will Give You a Loan With Bad Credit in Alberta?
There are lots of reputable companies to choose from for a bad credit loan in Alberta. Many of these companies allow you to get the loan completely online from the comfort of your home. Here is a list of commonly used lenders in Alberta. When looking at the lowest interest rates offered below 10-16% and loan amounts above $15,000 they will most likely require collateral.
- Spring Financial
- We offer multiple different credit products ranging from 18.99-46.96%. They provide loans up to $15,000 with flexible terms. Our loans are 100% open and report to both Transunion and Equifax to also help your credit score. We also provide a free credit score report online. Learn more here.
- LoansConnect has an interest rate of 5.75%-46.96%. The loan amount that they give ranges from $500-$50,000. The loan term can be anywhere from 6-60 months.
- Loans Canada
- This is a very popular destination for loans in Alberta. The interest rate ranges from 1.99%-46.96%. Their loan range is also from $500-$50,000 and their loan term ranges from 4-60 months.
- Mogo Finance
- The interest rate is 9.9-47.42%. They offer loans from $500-$35,000. Their term is 9-60 months.
- Unsecured loans up to $25,000. The interest rate is 26.99-39.99%. The term is 6-60 months. Fairstone at times will have stipulations with their loans that will see some of your loan used to payoff any collections items you have on your credit file and then send you the difference.
- Unsecured personal loans from $500-$15,000. To get approved, you’ll need an income of at least $1,200 and a steady source of employment with direct deposit to your bank. The term is 9-60 months and the interest rate is 19.99-46.96%.
- They offer loan amounts of $500-$15,000 and a term of 6-60 months. Their interest rate starts at 18.9%.
Some popular payday loan lenders in Canada include:
- Cash Money
- Captain Cash
- National Payday Loans
- Go Day
- My Canada Payday
What Credit Score do you Need to Borrow Money in Alberta?
The ideal credit score to borrow money in Alberta is anything above 700-720. This will ensure you get the lowest interest rates and you’ll be able to borrow much more compared to someone with a lower score.
However, you can borrow money with as low as a score of 300 at some lenders. Of course, the closer your score is to a “good” level is the ideal because this will make you look more reputable in the eyes of the lender. If you have a score above 500, you’re very likely to be able to obtain a bad credit loan in Alberta.
Some loans do not even look at your credit score and will only take into account other factors like your debt to income ratio, your employment status, your wages, whether or not you have a Canadian bank account or the amount of collateral you can offer up.
How Much Can you Borrow with a Bad Credit Loan in Alberta?
Some lenders offer up to $50,000 to be borrowed. However, this depends on other factors like your employee status, age, and overall finances like your debt-to-income ratio. This is the ratio of how much you earn compared to the total amount of debt you have. Lenders will look at this number to determine how likely it is that you’ll pay off the loan they provide you. How much you’re able to borrow also depends greatly upon which lender you choose. The minimum amount lenders can provide is $100-$1,500.
Is Your Credit Score Affected by a Bad Credit Loan?
There are a few different types of bad credit loans. Some of these loans require a credit check to get approved and others do not. If the loan you choose requires a credit check, this initial check can cause your score to drop 5-15 points. However, if you continue to pay off the loan on time, your credit score will be positively affected and could go up because this shows that you are a dependable borrower.
Payday loans will not do anything to improve your credit score. Instead if you do not pay them off in time, your credit score could drop. If you decide to take out a payday loan, don’t expect to use it to improve your credit. Make sure to pay it back in time and in full accounting for any interest.
What Happens if You Don’t Repay a Bad Credit Loan?
We do not recommend not repaying your bad credit loan. If you don’t repay your loan, your credit score will drop further as this information will be reported to all the major Canadian credit agencies. If you need a loan again in the future, it will likely be even harder to obtain.
If you continue to not pay the loan, you could eventually lose any future tax refunds or tax rebates. You could also eventually go to court, have your wages taken from you or your property. Your credit score could drop as much as 150 points from just one missed payment according to Borrowell. Not repaying a bad credit loan is dangerous for you both financially and legally. Before taking out any loan, make sure you have a way to pay it back no matter what.
Do Bad Credit Loans Need a Down-Payment?
Some bad credit loans allow for a down-payment, but this is typically not required. Typically, the lending company will simply deposit your loan amount into your bank account and you’ll need to pay it back in installments over time with interest. If you do put in a down-payment on your bad credit loan, your chances of getting approved for the loan go up. If you’re able to provide both a down-payment and a co-signer, you’ll likely be approved. If you really need a loan with bad credit, you’ll want to do everything you feel comfortable with to get it. Make sure that before you take out the loan, you are completely able to pay it back in time.