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Near prime loans in Canada
Find out what you need to qualify for a near prime loan.
If you have a good credit score and a regular income, you may be eligible for a near prime loan. These loans are designed for borrowers working to build up their credit. They usually come with higher interest rates and less flexible repayment terms than prime loans.
What is a near prime loan?
A near prime loan is for borrowers who have a credit score of between 660 and 720. These people may have a couple of missed payments on their credit history but are still seen as financially stable enough to pay off a large loan.
If you want to take out a near prime loan, many lenders will also need to see that you have a regular source of income (usually at least $50,000 per year).
Most loans fall into one of three different categories. Each one has different eligibility requirements and terms.
- Prime. Available to borrowers who have an excellent credit score (usually 720 or higher). Loans under this category have the best interest rates and repayment terms.
- Near prime. For borrowers with a credit score between 660 and 720. They usually come with higher interest rates and less optimal repayment terms.
- Sub prime. This can be taken out by borrowers with a credit score below 660. These loans include bad credit loans and credit builder loans.
Compare loans for all credit scores
What can I use a near prime loan for?
You can use a near prime loan to cover a number of different expenses. Some examples are listed below:
- Mortgage. Near prime loans are commonly used to purchase new homes.
- Car payments. These loans can also be used to finance new or used vehicles, or to cover large expenses like car repairs.
- Business expenses. Business owners can take out near prime loans to help pay for business expenses and outstanding invoices.
- Debt consolidation. Those with high debt loads can use these loans to consolidate debts into one easy payment with a lower interest rate.
- Emergency expenses. You may be able to use near prime loans to cover unexpected expenses like medical bills, vet bills or home repairs.
- Large purchases. These loans can also be used to pay for large purchases like furniture, electronics and flights.
Can I qualify if I have bad credit?
You won’t be able to qualify for a near prime loan if you have bad credit. This is because your lender will use your credit score as an indication of how likely you are to pay back your loan.
If your credit score is lower than 650, it means you have a history of missing payments or not paying loans or credit cards back on time. If this is the case, you’re better off applying for a no credit check loan.
Compare personal loans
We currently don’t have any personal loans options specifically available for those with near prime or prime credit scores, however you can compare loans with competitive interest rates in the table below.
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How to compare near prime loans
If you think you’re a good candidate for a near prime loan, then you should compare the following features before you settle on a lender.
- Interest rates. You’ll usually pay a higher interest rate on a near prime loan than you would a prime loan. Your rates will also fluctuate based on whether your loan is secured or unsecured. Compare 3-4 lenders to make sure you get the best deal.
- Fees. Some lenders charge administrative fees, late fees and early repayment fees. Make sure you read the fine print in your contract and avoid lenders that charge for extras.
- Term. If you opt for a longer term loan, you’ll pay more interest but if you take out a shorter term loan, your monthly payments will be bigger. Be sure to find the right balance for you.
- Maximum loan amount. Make sure you borrow only as much as you need because you’ll have to pay interest on the whole amount.
- Eligibility requirements. Your eligibility is often based on more than just your credit score. Make sure you meet all of the necessary requirements before you apply for a loan.
How can I get approved for a near prime loan?
Once you settle on the right lender, it’s time to apply for your loan. To do so, you should follow some basic steps:
- Check your credit score. The first step to applying for a near prime loan is to check your credit score with a credit bureau like Equifax or TransUnion. Your score should sit between 660 and 720.
- Compare lenders. If you’re in the right range, you can start comparing lenders.
- Fill out your application. Once you settle on a lender, it’s time to apply. You should be able to fill out an application online or by visiting your lender in person.
- Verify your identity and income. Most of the time you’ll need to supply a piece of ID to prove your identity. You may also be asked to show proof of income or employment status through pay stubs or tax forms.
Bottom line
If you have a decent credit score and a regular source of income, you may qualify for a near prime loan. Find out if you’re eligible and learn how to compare lenders to get the right loan for you.
If your credit score is less than excellent, compare loans for all credit scores to see if any are right for you.
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