How to get a $15,000 Personal Loan in Canada

How The Lender Determines Your Interest Rate

The interest rate you get on your personal loan, no matter what size loan it is, is based on your credit report. This report shows the lender how financially responsible you are and what your credit history looks like.

Before a lender does a hard credit check to get your credit report, they do something called a soft credit check. A soft check gives a lender a general idea of your credit score, accurate within 100 points. This soft check will tell lenders if they can lend to you, before they do the hard credit check. This is what’s known as a pre-approval.

Once you have received a pre-approval, the hard check will be done. This type of credit check does require consent. This is because your credit will take a hit by anywhere from 5-15 points. This is why it is recommended to have no more than 6 hard checks done per year.

The hard check will give the lender an accurate depiction of your current credit situation as well as your credit history. The lower your credit score is, the higher your interest rate will be. The higher your credit score, the lower your interest rate.

Credit Scores and Interest Rates

In Canada, credit scores range from 300- 900 with 300 being the lowest and 900 the highest. This score demonstrates your financial responsibility based on 5 different categories:

• Payment history
• Credit utilization
• Credit history
• Inquiries
• Public records

Each of these categories makes up a specific percentage of your credit score. The better you fare in each category, the higher your overall score. This credit score then tells lenders what you are capable of with your finances. This will help them dictate if you have a low or high credit score.

Different Types of Loans for $15,000

When it comes to getting a loan for $15,000, there are a few different types to choose from, but they are all considered to be installment loans. The most popular type of personal loan is the unsecured loan, but there are also:

• Secured loans
• Cosigner loans
• Debt consolidation loans

Unsecured Loans

The reason that an unsecured personal loan would be the most popular for a loan of this size is because there is no collateral involved with this type of loan. This is why they often have the highest interest rate of all the different types of loans. They are also the most powerful when it comes to your credit report.

Secured Loans

Secured personal loans are often easier to get because of the collateral involved. Some examples of a secured loan are home equity loans, home equity line of credits and vehicle loans. These types of loans have lower interest rates than unsecured personal loans, but they also have more risk because your collateral can be seized when you default on your payments.

Cosigner Loans

Cosigner loans are either unsecured or secured loans where you need another person to sign due to you having bad or no credit. The cosigner can be anyone with a good credit score that will take financial responsibility for the loan if you default on your payments. When you apply for your loan, the lender will let you know if they require a cosigner or not.

Debt Consolidation Loans

Debt consolidation loans are often unsecured loans that the bank or lender grants to consolidate all of your debt into one loan/interest. This is a common reason to get a personal loan, especially if a majority of your debt is credit card debt. Not only do credit cards have high interest, credit card interest is compound and it compounds daily if you don’t pay off the purchase in full by the time your monthly payment is due.

Personal Loan Amounts in Canada

In Canada the amount you can get for a personal loan depends on the lender. The most common is $50,000, but some lenders will go as high as $100,000. That is, if you are approved. There are many factors a lender will take into account to determine what they are able to approve you for. The three most important are credit score, debt to income ratio and monthly income.

We have already discussed how your credit score comes into play, but what about your DTI and monthly income. Well, those determine what you can reasonably afford per month. Your DTI is the amount you have to pay in mandatory payments per month in relation to your monthly income. These include but aren’t limited to:

• Minimum monthly credit card payments
• Minimum monthly loan payments
• Mortgage payments/ rent payments
• Car loan payments

In total, most lenders don’t like your DTI to exceed 40%. That being said, some lenders will allow your DTI to go as high as 50%. Any higher than this they risk not getting their money since there are more bills for the average person than just those included in your DTI.

Your monthly income goes hand in hand with the DTI. The lender needs to verify, with the interest rate, you are able to make your payments on time. If not, you may end up getting an offer for a loan lower than the amount you originally wanted.

Eligibility to Get a $15,000 Loan

In order to get a personal loan in Canada, there are some minimum requirements that you have to meet. It is important to verify that you meet these requirements before you apply for a loan to avoid a decline on your credit report. You may still get a decline even if you meet these requirements but, being prepared as you possibly can will really help.

• Age of majority: Depending on where you live in Canada, the age of majority is either 18 or 19. Check with your lender to verify if you are old enough to apply.
• Canadian citizen: Most lenders will require you to be a Canadian citizen or permanent resident in order to get a loan.
• Stable income: While it isn’t a requirement to be employed to get a personal loan, you do have to have stable income. Some lenders even have a minimum income requirement, usually around $1,200 to $1,500 per month.
• Active bank account: Having an active bank account is a requirement, not only to receive the funds, but also to make the monthly payments. Most lenders require activity for at least 90 days.

Along with these requirements, it is important to keep in mind that your credit score and DTI will be important when being considered for the loan. You can keep up to date with your credit score by checking your free score online through Borrowell, Credit Karma, or Equifax and Transunion.

Approval Process for a $15,000 Loan

Whether you decide to go with a traditional lender, like a bank or credit union, or a private/online lender, the approval process will be similar. Most lenders in Canada will require the same documentation. The only exception might be if you have had a recent credit check in the last year with the lender, they may not require you to do another one. Especially if you have been making all of your payments on time.

The first thing a lender will require, after you fill out an application, is the documentation needed to prove your income and identity.

• Government issued photo ID (drivers license or provincial ID)
• Proof of income (pay stubs, letter of employment)
• 90 days of bank statements
• Direct deposit form
• SIN number for credit check

Once all of this documentation has been submitted, the lender will then go over it to decide what loan amount you can be approved for at what interest rate. The lender will then formally present you with the offer. If you accept the offer, then you sign the required documentation and wait for the funds to get deposited into your bank account.

Approximate Timeline on $15,000 Loan

The timeline for the approval process and the funding deposit, all depends on the lender you are working with. With traditional lenders like banks and credit unions, the approval process can take up to a week, in some cases longer. Individual circumstances can make this timeline vary for everyone.

If you decide to go with an online lender, you can have your application approved as soon as the same day. If you decide to get your funds via e-transfer, you could receive it as soon as an hour after the loan is finalized.

Easiest Place to Get a $15,000 Loan

Getting a loan of $15,000 is more difficult than getting a smaller loan. Lenders usually require a credit score of at least 600 and you have to have the monthly income required to make the payments.

The easiest place to get a loan like this depends on your individual financial situation. For some, this could be a bank or credit union, especially if you have a good relationship with your financial institution. For others it could be an online lender. This is because personal loans are normally the main priority for online lenders. They usually take lower credit scores and are more lenient with their approvals. Their interest rates tend to be similar to the banks', so it isn’t costing you much more than that of a traditional lender.

Monthly Payments on $15,000

There are two main factors that contribute to the monthly payments on a loan, besides the loan amount: the loan term and the interest rate of the loan. There are two different types of advertised interest rates, the interest rate and the APR (Annual Percentage Rate).

The APR includes the interest rate as well as any extra fees associated with the loan. It is then broken down into a percentage per month and that is the interest that is paid per month on the loan. For example if the APR is 24%, it is then charged at a rate of 2% per month on the principal balance of the loan.

Another factor to consider when it comes to interest rates is whether they are simple or compound interest. Simple interest is charged on the principal of the loan per month with the first month of the loan having the highest interest payment, and the last payment having the lowest interest portion. Compound interest works the same except for the fact it compounds (usually monthly), but these compounds are included in the monthly payments.

Based on this, let’s take a look at a few different interest rates and what the monthly payments would be on a 5 year term for a $15,000 loan, with simple interest.

To help you figure out what your monthly loan payments will be, most major banks and online lenders have a personal loan calculator you can use to find an approximate payment amount.

Getting a $15,000 Loan Instantly

A loan of this size is something you aren’t going to be able to get instantly. Smaller amounts you could get a payday loan for, but they don’t have payday loans for amounts this large. As previously mentioned, a loan of this size will have to meet some requirements that the lender will want to verify. Depending on the lender, the soonest you could get a loan of this size is a few hours after an application has been completed.

Can You Get a $15,000 Loan from the Government?

During the COVID-19 pandemic, the federal government was giving interest free large loans to small businesses. Depending on the circumstances, the government does give grants, but they do not have any personal loans. All personal loans are done through lenders like banks, credit unions and online lenders.

Final Thoughts

When it comes to getting a personal loan, it’s important to consider where your current financial and credit situation is before you apply. Each time you get a credit check, your score takes a hit so you want to try to have less than 6 checks per year. Having an idea of your approval odds can help you figure out where to apply and when. With a loan as large as $15,000 you also want to make sure that you can afford the monthly payments. Defaulting on a loan can not only hurt your credit report, but reduce your odds of getting a personal loan again. When you are considering a personal loan, make sure you verify you can afford the payments before you sign the documents.