5 benefits of personal loans in Canada

Whether you need money to consolidate your debt or to cover an emergency repair for your home, a personal loan can be a good option. Funds can be deposited into your account within a business day, so you aren’t stuck waiting around for money you need right away, and you can set the length of your loan so you don’t wind up with payments you can’t make.

Here are five benefits of using personal loans in Canada.

1. Access to a lump sum of cash

You’ll receive the funding for your personal loan in one lump sum, which makes it easier for you to use it in the way that works best for you. If you need money for a large purchase or to pay down high-interest debt, you can do so all at once.

Unlike loans that are only available for a specific type of purchase, such as a mortgage or a car loan, the money from your personal loan can be used for whatever you need. So you can use it to buy a car, pay for a wedding, or go on a trip.

2. Fast funding times

Depending on the lender and your preferences, you can apply and be approved for a personal loan online within a day. That means you get access to the money you need – between $500 and $15,000 – when you need it.

3. No collateral required

With secured loans, you have to put up collateral such as your car, home, or other assets to be approved for financing. With an unsecured personal loan, you aren’t required to put up collateral for approval.

This means that not having any assets to put up as collateral won’t affect your chances of being approved for the loan. So long as you have a steady income and a good credit history, you’re eligible for a personal loan.

If you do have assets, you won’t be at risk of losing them if something should go wrong and you’re unable to repay your loan. That said, it’s crucial that you make your loan payments because failing to do so will have financial consequences and a negative impact on your credit rating.

4. Consistent payments

With fixed interest rates and a set payment schedule determined by the lender, you’ll always know how much you’re repaying every payment. There won’t be any sudden increases in your payment amount.

You choose the term of your loan, depending on the amount you borrow. So if you require a little longer to repay your loan – up to 60 months – you can take that time. If you wind up able to pay back your personal loan more quickly than you expected, you can.

5. Easier to manage

Some borrowers use their personal loans to consolidate multiple debts into one payment. Rather than keeping up with various loans and credit cards, each with its own due dates, interest rates, and minimum payments, you simply have to manage one debt.

Your payment will be automatically deducted from your bank account, so you don’t have to worry about missing a due date. Payments are scheduled according to your pay cycle, so you’ll always know when the payment comes from your bank account.

The bottom line

Depending on your situation, an unsecured personal loan can be a good option for you if you need access to a lump sum of cash. Before you agree to any loan, make sure you understand all the terms, including any fees, interest rates, and payment terms. Once you have the funds, you can use them in any way you need.