Do you need money and don’t know where to look? Well, a personal loan might be the best place to start. There are different types of personal loans. The best one depends on your situation but, ultimately, it is in your best interest to look for the lowest interest rates you can get approved for and flexible payment options.

Our Personal Loan Application Process

What is a Personal Loan?

A personal loan is when you borrow a fixed amount from a lender that you pay back over time. In the agreement, you must pay back the principal (the amount you borrowed) as well as the interest and any other fees attached to the loan. People require personal loans for a variety of things, and they usually range anywhere from $100-$50,000. The time to pay them back usually ranges anywhere from 6 months to 5 years.

Types of Personal loans

There are 3 types of personal loans in Alberta, and across Canada: secured, unsecured and payday.

Secured loans require collateral, such as a car or a house, to ensure the loan is paid back. If the loan is not paid back in the period of time agreed to or the payments default, the lender can seize the asset that was used as collateral.
Unsecured loans are just cash loans. They do not require any collateral. If the payments default on an unsecured loan the lender has the right to sure you and/ or send you to collections for the remained of the loan owed. These types of loans are also referred to as consumer loans, long-term financing plans, and installment loans.
Payday loans are same-day loans, but these loans do not normally require a credit check. They often have extremely high-interest rates making them very easy to get but can often lead to a cycle of loans that is difficult to get off of.

How to get a personal loan in Alberta

In order to obtain a personal loan in Alberta, there are a few things that you need. The general requirements are a physical address, an income, and a bank account. This is just to apply. Once you have applied there are a few things that lenders will go over. The first is your credit score.

What credit score do you need to get a personal loan in Alberta?

In Canada, credit scores range from 300 (poor) to 900 (excellent).

Excellent Credit	760-900
Very Good Credit	725-759
Good Credit	660-724
Fair Credit	560-659
Poor Credit	300-560

To get approved for a personal loan through traditional lenders like a bank or credit union, it is recommended to have a good credit score (660 or higher). You can still get a personal loan with bad credit (under 659), but that is often through online lenders instead of traditional lenders

What if I don’t know my credit score?

Did you know that before applying for a loan there are websites that allow you to check your credit report? Credit Karma allows you to check your TransUnion credit score while sites like Borrowell allow you to check your Equifax credit score. These free credit score websites can give you a good idea of where you stand when it comes to applying for a personal loan.

While your credit rating is quite important in determining if you are approved for a personal loan, there are other factors that apply as well. Having good credit isn’t always a guarantee of personal loan approval. Your debt-to-income ratio is very important as well as the amount of income you bring in per month.

What is a debt-to-income ratio?

A debt-to-income ratio (DTI) is a measure of how much income you have coming in compared to how much debt you owe. It is important to remember though, that DTI is based on your minimum monthly debt payments, not on the total amount of debt that you owe. For example: Say you have a credit card that you owe $2000 on but your monthly payment is $65. It is the $65 that contributes toward your DTI.

When a lender is assessing your DTI, generally it should not exceed 50% in order to be approved for a personal loan. Anything higher than 45% will most likely result in being declined for the loan but some lenders to extend that to 50%.

Minimum Income Requirement

The minimum income requirements differ for every loan company, so it is important to look into this before you apply. This applies to your bank as well as other lenders. Some companies, like Spring Financial, require a minimum income of $1200 per month, and an income lower than this will result in a decline.

Documents needed to get a personal loan

In order to finish meeting the requirements to get a personal loan, lenders need a few documents in order to complete your application.

Proof of Income – In order to prove how much income you bring in per month, lenders will require 1-2 of your most recent pay stubs or income statements. Depending on how long you have been at your job, they may also require a letter of employment to prove your employment status.
Proof of Address – The lender will also need your current address. You can use your driver’s license or any recent bill such as hydro, credit card statement, or any other recent bill. Most lenders require the bill to be within the last 90 days.
Proof of Identity – In Alberta, you can use any form of government picture ID such as your driver’s license or personal health card.
Bank Statements – Most lenders also require at least 3 months of bank statements. These statements prove consistent income and allows the lender to see that you make your payments on time as well as see any other debts you may have.

Do you need proof of income to get a personal loan?

In order to prove that you are able to pay the lender back, proof of income is required to get a personal loan. That being said, you do not need to be employed you just need to prove that you receive the minimum income amount per month. In Alberta, things like structured settlements qualify as well as most types of government income sources are enough to qualify you for a personal loan. Some examples are:

Employment Insurance (EI)
Canada Pension Plan (CPP)
EI Maternity Leave
Child Tax Benefit (CCTB)
Old Age Security (OAS)
Workplace Safety and Insurance (WSIB)
Private Pension Plans

Advantages of Personal Loans

Why would you go with a personal loan instead of using a credit card or a line of credit? Well, for some purchases credit cards and lines of credit are great but they don’t have the same credit-building power that personal loans have. Because a cash personal loan is unsecured it builds the most credit due to a lack of collateral. Most personal loans are open, meaning there is no penalty for paying them off early and they can have lower interest rates than most other types of loans. Lastly, in Alberta, you can cancel your personal loan within 24-48 hours of signing the papers. This does depend on which lender you choose to use and what timeframe they allow.

Disadvantages of Personal Loans

Some disadvantages to personal loans are that, before approval, a hard credit check is required. Every time a hard credit check is done, this lowers your credit score by roughly 5-15 points which is why it is recommended to not check your credit more than 5 times per year. This is why it is important to verify you meet the requirements of a personal loan before you apply.

Another disadvantage of a personal loan is that, even though they can have low-interest rates, they can also have high-interest rates. This all depends on your credit score and your DTI. The lenders’ risk factor in giving you a loan determines the interest rate they will give you.

How much of a Personal Loan can I get in Alberta?

The amount you are able to get for a personal loan in Alberta depends on what you qualify for. The average personal amount in this province ranges from $1000-to $35,000 but, in general, personal loans generally range from $500-$50,000. The amount can be higher than that depending on if the loan is secured or unsecured. It also depends on if you are getting a personal loan from a bank or a third-party lender.

How much can you borrow from a lender?

How much you can get from a lender ultimately depends on the maximum amount lenders provide. When dealing with your bank, sometimes you can get a personal loan up to $100,000. With online lenders, it is a lot less.

Some online lenders only go up to $15,000 while others can offer loans up to $50,000. Personal loans, however, do not go below $500.00. This is because personal loans, also known as installment loans, are paid back over a certain period of time. Only payday loans offer amounts under $500. While payday loans do offer lower amounts than personal loans, they aren’t recommended for a few reasons.

Why are personal loans better than payday loans?

One of the main reasons it is recommended to go for a personal loan, even if you need less than $500, is that payday loan interest rates can be over 319%- to 521%. With a personal loan, most are open term so you can pay them off whenever you like, or you can leave the portion of the personal loan that you don’t use in your bank account to make the payments.

Personal loans also have significantly lower interest rates. They can range anywhere from 5% to 46.96%. Even with the highest interest rate, a personal loan is still cheaper than a payday loan.

Lastly, payday loan companies do not report to the credit bureau positively. What does that mean? Well, any payments you make to a payday loan company are not reported, they only report if you end up defaulting on your payments. Because of this, no matter how many payday loans you take out and pay back, it does not benefit your credit score in any way. Personal loans, however, do report positively on your behalf and build your credit score.

What are the monthly payments with a personal loan?

The monthly payments on your personal loan would depend on a few different factors.

Interest rate – Interest rates vary quite significantly which can greatly affect the payment on your personal loan. The higher the interest rate the higher the payment. This is why it is important to verify if the loan is open or not (most are). If you can put extra on the principle, you pay less interest.
Term of the loan – How long get the loan for also affects the amount of your monthly payments. The longer the loan period, the smaller the loan amount.
Amount borrowed – The last factor is how much money you borrow. The smaller the amount, the smaller the payments

What is the average length of a personal loan?

While most personal loans range anywhere from 9 months up to 60 months, sometimes they can go longer depending on the amount borrowed and the type of personal loan you secure.

What is the easiest loan to get?

When discussing loans, people of ask what the easiest type of loan is to get. Honestly, a payday loan in the easiest since they only verify your employment/income. Payday loan companies do not require the same level of information that is needed to get a personal loan, but it is also much riskier.

The easiest type of loan to get, which isn’t a payday loan, is a secured loan. Since secured loans require collateral before approving the loan, there is less risk for the company making them much more willing to give you the money.

Reasons to get a personal loan

While there are many reasons to get a personal loan. Here are a few of the most common:

Tuition – Since secondary education is becoming increasingly more expensive, it is hard to attend school while working full time and pay tuition in full. A personal loan allows you to get your education while paying back the cost over time. Many lenders offer student loans with flexible payments and interest rates to allow you to finish school before worrying too much about the financial aspect of it.
Debt Consolidation – This is a great option if you are looking into getting better management of your finances. It can be hard to manage multiple forms of debt with different interest rates. By obtaining one personal loan and paying off the rest of your debt, you can turn your debt into one monthly payment.
Home Renovations/Emergency Expenses – If you own your home sudden expenses can occur like a hot water tank replacement or a roof replacement. If you don’t have the cash to cover it, a personal loan is a great option.
Purchasing a vehicle – This can also be another reason to get a personal loan. Whether you are purchasing new or used, personal loans can be a flexible option to get a vehicle fast.
Moving Costs – Moving can be costly. Whether you hire a moving company or not, the expenses add up quickly and a personal loan can help make the adjustment easier.
Emergency cash – Sometimes life happens, and we just get behind on our bills. No matter your situation with your personal finances, a personal loan can help.

No matter what you need a personal loan for, there are plenty of flexible options available to you.

Best Personal Loans in Alberta

Finding the best lender in Alberta can be difficult depending on if you have good credit or bad credit. Those with good credit are able to go to their bank or credit union and get a competitive rate on a personal loan. However, since that isn’t the best option for everyone, there are many alternative options.

Since we live in the online era now, you no longer have to specifically go looking for a company in Alberta. There are many different online lenders with competitive rates, offering these rates all over Canada. Ultimately, the final rate depends on your credit rating as well as your personal finance history.

That being said, if you do get an offer from any lender you apply for if it is not to your liking, you are not obligated to take it.

Where does Spring Financial come in?

If you are looking into online lenders, check out Spring Financial. Spring Financial is one of the leading online lenders across Canada. We offer personal loans ranging from $500-$15,000 and you can apply in as little as 3 minutes. We have flexible interest rates, open loans and you can get your money the same day you apply.

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