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Frequently asked questions

• Can you get a loan with bad credit?

  Yes, there are lenders who specialize in offering loans to people with poor credit, though the interest rate will be higher. You might also want to work on improving your credit by getting a credit rebuilding loan or a secured credit card. Once your score improves, it’ll be easier to get financing with more favourable terms.

• What credit score do I need to get a loan?

  In Canada, credit scores range from 300-900. A good credit score starts at 650, and this is the point at which most lenders will consider you for a loan. To learn more about what a credit score is and why it’s important, check out our guide.

  It’s still possible to get a loan with a lower credit score. However, your options may be limited, and you’ll likely be charged a higher interest rate to offset the increased risk that you won’t be able to pay back the loan.

  Many payday loan providers offer no credit check loans, because the funds are secured by your next pay cheque. But these loans are much more expensive than other types of loans, and there is a high risk of getting caught in a debt cycle. Do your research before deciding whether to get a payday loan, and pursue other funding options if possible.

• Will applying for a loan hurt my credit score?

  Yes, every time you apply for a loan, your credit score temporarily drops a little. However, as time passes and you manage your credit responsibly, it will rise again. Too many credit applications in a short span of time will hurt your credit score severely. You should try to wait at least 6 months between applications.

• Why was my loan application rejected?

  Your loan could be rejected for a number of reasons including insufficient income, a low credit score, a disproportionate debt-to-income ratio (you own more than you make) and/or failure to provide all the required information. Contact your lender for more details.

• What happens if I miss a payment?

  If you miss a payment, you may be charged a late payment fee. If there weren’t enough funds in your account, you may be on the hook for 2 insufficient funds (NSF) fees – one from your bank and the other from your lender. Some lenders allow 1 missed payment a year or may be willing to waive the missed payment fee if you contact them and make arrangements to submit the money. It doesn’t hurt to ask (especially if it’s your first missed payment).

  Before signing any loan agreements, check with your lender to find out its exact policies.

• Can I pay off my loan early?

  This is easier with some loans that with others. Personal loans are more likely to allow early repayment without penalty, whereas the same may not be said for auto loans.

• What is the difference between a secured and an unsecured loan?

  A secured loan (like an auto title loan) is backed by collateral – such as an asset or some form of security. An unsecured loan (like some personal loans) does not require any collateral. Secured loans are less risky to lenders and therefore come with lower interest rates and an easier chance of approval. However, if you default on the loan, the lender has the right to confiscate your security.

• Can I transfer my loan to someone else?

  Some loans allow you to do this, while others do not. Many auto lenders allow you to transfer loans, given that cars are often resold before being fully paid for. But you won’t be able to transfer student loans or personal loans as these are provided based on applicant-specific information.