If you’re struggling to stay on top of your debts, you’re not alone. In a recent survey we found that 10.3 million Canadians are stressed out about the amount of credit card debt they have. If you’re looking for a way to manage your payments and take control of your finances, debt consolidation loans may be able to help.
These types of loans are used to pay off multiple small, high-interest debts so you only have one easy lower-interest payment to make. Whether you live in Montreal or Gatineau, find out about your options for debt consolidation in Quebec, where you can find a loan and what you need to qualify.
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How does debt consolidation in Quebec work?
The main benefit for Quebecers considering debt consolidation is that it allows you to combine all of your debts into one manageable monthly payment, ideally at a lower interest rate. The way debt consolidation works is by using one large, low-interest loan in order to pay off all of your smaller, high-interest debts. A debt consolidation loan is usually payed back by monthly payments typically between 1 and 5 years.
Using a debt consolidation loan can take the pressure off of you to pay several different bills every month, juggle minimum payments and different due dates. It helps you avoid missing or making late payments while protecting your credit score.
Debt consolidation example: Jacqueline, a Montreal resident, has $15,000 of credit card debt
Jacqueline lives in Montreal and is carrying a balance of $5,000 on three different credit cards, which adds up to $15,000 of credit card debt in total (at 20% APR). She decides she wants to be debt free in 3 years. In order for that to happen, Jacqueline would have to start paying a total of $557 per month on credit card repayments. By the end of the 3 years, she would have payed $5,073.50 in interest.
Jacqueline instead searches for Montreal debt consolidation loans and found one at 9% APR over a 3 year term. Her total monthly payments would then be $476.96, with only $2,171.71 going towards interest. So, by opting for a debt consolidation loan, Jacqueline would end up saving around $2,901.79.
Before Consolidation
After Consolidation
Balance
$15,000
$15,000
Interest rate
20%
9%
Year(s) to pay off
3
3
Monthly payment
$557
$476.96
Total interest paid
$5,073.50
$2,171.71
Total balance paid
$20,072.50
$17,170.71
What are the options for debt consolidation loans in Quebec?
There are several forms of debt consolidation loans in Quebec, so you’ll have to pick which type suits your needs best.
Secured loans.Secured loans require you to put up an asset like your house or car to “insure” your payments. This can be risky since the bank can sell off your asset to reclaim its money if you don’t make your payments on time.
Unsecured loans.These loans rely on your credit score rather than an asset. They are less risky, but you’ll usually need a “good” credit score (above 650) to qualify and your credit score will take a hit if you default on your loan.
Bad credit loans. You may be able to qualify for a bad credit loan in Quebec if your credit score is below 600. These loans typically come with higher interest rates but can be useful if you’re having trouble qualifying for traditional loans.
Guarantor loans. If you can’t qualify for a bad credit loan, it might be time to turn to family or friends to ask for help. If they’re willing to cosign a loan, you may be able to get a better interest rate and qualify for a larger amount.
How to compare debt consolidation loans
Now that you have more information about what a debt consolidation loan is, it’s time to compare lenders. Here are a couple of things to look for:
Lowest rates. Your best bet to save money on your loan is to get the lowest interest rates possible. Start by comparing three to four lenders to get the best deal.
Best repayment terms. Find a lender that will allow you to repay your loans at your own pace and that will work with you to negotiate the best terms possible.
Easy eligibility. If your credit score is below 600, you should look for a loan that has flexible approval criteria.
No fees. If your lender asks you to pay fees on your loan, chances are you should keep looking for a better offer.
Simple application. Look for a lender with a quick and easy application process to avoid excess paperwork.
Good customer service. Search for a lender that has a good reputation and solid online reviews.
While every lender in Quebec and online will have a different process, you will typically need to follow these basic steps:
Check your credit score. Order your credit score from a credit bureau like Equifax or TransUnion. If your score is below 650, be careful about how many loans you apply for because your score will go down every time a lender checks your credit.
Fill out your application. You’ll need to fill out a paper or online application, complete with your personal and banking info.
Verify your ID and income. You should expect to prove some basic details like who you are and how much money you make. You can do this by providing government issued ID and documents like your pay stubs or tax returns.
Other options for Quebecers struggling with debt
Government subsidies. You should look into government subsidies like social or child assistance payments sponsored by the government of Quebec.
Borrowing from friends or family. If you’re struggling with bad credit, it might make sense to ask your family or friends for a no-interest loan.
Debt settlement. You may be able to get your payments reduced through debt settlement. The only thing to watch out for is your credit score going down as a result.
Low-interest credit card. If you have several high-interest credit cards, try transferring your balance to a card with a 0% introductory balance transfer rate or get a lower interest card to cut down on high APRs.
Debt relief. A debt relief company can help you understand what debt relief options are available to you, help you to create a plan to get out of debt and connect you with your lenders to settle your debts as quickly and smoothly as possible.
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Frequently asked questions about debt consolidation in Quebec
You’ll usually need to be 18 years old to borrow money in Quebec, with proof of continuous employment and an active chequing account.
Yes, there are many Montreal debt consolidation options available. Most debt consolidation loans Montrealers will have access to will offer interest rates of anywhere between 2% up to 47% on loans of $200-$50,000, depending on factors like the type of loan you get and your credit history. Loan terms can range from 6 months to 5 years.
This will depend on your income, credit score and the maximum amount available from your lender. Most debt consolidation loans will only be issued to pay off your small debts (usually less than $50,000).
No. There are many types of debt that can’t be consolidated including student loans, mortgages and vehicle loans.
Claire Horwood was a writer at Finder, specializing in credit cards, loans and other financial products. She has a Bachelor of Arts in Gender Studies from the University of Victoria, and an Associate’s Degree in Science from Camosun College. Much of Claire’s coursework has focused on writing and statistics, with a healthy dose of social and cultural analysis mixed in for good measure. In her spare time, Claire enjoys rock climbing, travelling and drinking inordinate amounts of coffee. See full bio
Chelsey Hurst is an associate editor at Finder. She loves empowering people to avoid financial pitfalls and make better decisions with their money. Chelsey has a Bachelor of Science from Redeemer University, a Master of Science from McMaster University, and has won multiple awards for research communication. In her spare time, Chelsey enjoys cooking and taking long walks in nature. See full bio
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