Five ways to get a loan in Canada if you have a bad credit history
There are many reasons why you need a loan. You could find yourself in an unplanned situation, need to pay off credit card debts, pay college fees, cover an expensive purchase, finance a businesses, or buy a car.
However, in Canada, the types of loan products available to you if you have a bad credit history can be very limited. It might even feel impossible to get the financial assistance you need.
But while the perfect lender may not exist, it doesn’t mean you can’t borrow money if you have bad credit. It may take more effort and research, and possibly be more complicated, but there are ways around the problem. And to help you, here are five ways to get a loan in Canada if you have a bad credit history.
1) Search for lenders who offer bad credit loans
The first thing to do is look for lenders who offer bad credit loans. A bad credit loan is designed for people with poor and bad credit scorecards.
There are many bad credit loan options, like personal or payday loans. But it’s important to know that bad credit loans come at a high cost, and you’ll need preapproval for your loan request.
Make sure you read all the terms and conditions on the loan contract so you can ensure that you can afford and repay the loan – so you don’t default and end with an ever worse credit score in future.
Contact reliable financial providers like Friendly Lender bad credit loans Canada that offer convenience. Check the official website to learn how you can request bad credit loans online.
2) Raise your credit score
If you have a poor credit score then it’s time to take action and try to improve it. A good start is to pay all your bills and liabilities on time. Keep your credit card balance low and avoid using multiple credit cards for your purchases. Try to use cash for small, daily purchases and pay your cellphone bill on time.
And read the terms and conditions of any financial product you take out, and make sure you abide by them. Over time, by working on improving your credit score, you’ll have more financial options available to you, and you can take advance of better terms and lower interest rates on loan products.
3) Talk with your current lender
Once you’ve started improving your credit score, it’s worth having a chat with the credit union or bank who lends you money. With your new report, you may be able to convince them to lend you a loan based on your long term relations with them, and good past experiences.
Your current lender institution is the best place to start. They’ll look at your financial profile, and consider any loan products they have with flexible terms and conditions. If you’ve been with them for a long time, they may offer you a small, personal loan.
4) Ask your family or friends
In the event of bad times, you can ask your parents, siblings, close friends, or even employer to lend you money. If they have the means, the people who know, like and trust you are sometimes willing to help out. And they’re likely to charge you less interest than some lenders (if they charge you any at all).
If they don’t have the capital, or are unwilling to lend it to you, another option is to ask them to co-sign for you. A co-signer is a person who takes responsibility to pay the borrower’s debt, plus the cost of interest rates, if the debtor is unable to make timely payments.
A co-signer needs to have a good credit score, which provides a strong base to get a loan from reputable financial lenders. You’ll need to reassure your co-signer than you can make all the payments on time if this is an approach you’re considering.
5) Go for short-term loans
Borrowers with poor credit history can also look for short duration loans – but be careful before you commit to one. These loans can have high-interest rates, so choose wisely. It’s also important to ensure you can commit to the payment terms before signing up.
That said, short-term loans can sometimes be helpful in a tricky situation, where you have no other financial options. Yes, you might need to repay the loan within 6-12 months, but they can sometimes solve financial crises and enable you to meet your temporary working capital needs.
Photo by Sharon McCutcheon
