If it is your desire to study in Canada but you don’t have enough finances to facilitate that, it might interest you to know that there is an avenue for you to get a personal loan for your study. However, it is vital that you must know certain things before applying for a personal loan.
In this article, we will discuss personal loans in Canada for international students and how to get one. Keep reading to retrieve the information it contains. See How To Get Startup Loan For Business with No Money.
What Is A Personal Loan?
A personal loan is money given to a borrower which they can use for any purpose they would like. Therefore, the funds do not need to go directly into paying tuition, but many other things: you could cover living/food expenses, personal purchases
Easy Personal Loans You Can Qualify For As A Student
Applying for the right type of loan should increase your chances of getting approved. Here are two types of personal loans you can qualify for more easily than an unsecured personal loan.
1. Secured Personal Loans
A secured personal loan requires you, the borrower, to put up some type of collateral in order to qualify. This type of loan is less risky for the lender and therefore is frequently offered to potential borrowers who have low credit scores or who have experienced past financial issues.
Some of the assets you can put up as collateral before getting the loan include; Cars, recreational vehicles, and property. Because your asset acts as collateral, it can be seized by your lender should you default on your loan.
2. Consider A Guarantor Loan
If neither an unsecured nor a secured personal loan is the right option for you, you can consider a guarantor loan.
Guarantor loans are a good option for borrowers who have bad credit or who can’t get approved by conventional lenders.
Importantly, you would need to find a borrower to cosign your loan with you. Ideally someone with good credit and a favourable financial status.
Here, your cosigner’s credit will become the main focus, rather than your own. However, you will still be primarily responsible for making your loan installments on time.
Criteria To Be Eligible For A Personal Loan When Applying
In order to increase your chances of approval at an affordable rate, here are the tips to increase the odds of qualifying for a personal loan:
1. Understand Your Finances
It is also crucial to assess how much you need to borrow. The more you borrow, the more you will have to pay back, with interest. Make sure you have carefully assessed exactly how much you need to borrow, so you apply only for what is required.
2. Check your credit score
Before you apply for a loan, ensure that your credit report is checked to see what your credit score is. Your score will influence your ability to be eligible for a personal loan, so make sure it’s high enough to meet the lender’s criteria.
3. Get Pre-Approved And Compare Options
Before you officially apply for a personal loan, consider getting pre-approved first. This will help you find out if your finances and credit health meet the lender’s requirements.
Moreover, getting pre-approved will give you a clear idea of what type of loan you can get and will help you avoid unnecessary application rejection and hard credit inquiries.
What Is A Pre-Approval?
Getting pre-approved for a loan means that your potential lender is willing to lend you a certain amount at a specific interest rate based on factors like your income, or your credit score and credit history.
Technically there are two types of pre-approval: lenders can simply offer you pre-approval via a letter offer or you can ask for it.
To get pre-approved, you will need to provide lenders with information about your income, employment, and assets.
Based on this information, you’ll receive offers on different loans, which you can then compare side by side to see where the best options are. Using an online comparison tool will make comparing loan options quick, easy, and convenient.
4. Gather Documents
Once you are ready to proceed with an official loan application, you will need to provide the lender with specific documents that they’ll use to verify your identity and financial health, as listed above.
Keep in mind that any inaccuracies on your loan application and missed documents will prolong the approval process and may even risk loan rejection.
5. Apply And Get Funded
If you apply for a personal loan with an alternative online lender, you could receive an answer about whether or not you’re approved within minutes to a couple of days depending on the lender.
Shortly after receiving the approval notice, you will receive your funds. The lender will send you the funds through e-transfer or by depositing the money electronically into your bank account.
How To Improve Your Chances Of Being Eligible For A Personal Loan
Before applying with a lender, there are a few things you can do to increase your opportunity of qualifying for a personal loan.
Check Your Credit Score
Most lenders will use your credit score to determine your eligibility for a personal loan. Credit scores are of particular importance to banks and other traditional financial institutions.
While there are personal loan lenders who will approve you for a personal loan with bad credit, you’ll have an even better chance of qualifying with a high credit score.
Moreover, the higher your credit score, the more likely you’ll be able to secure better loan rates and terms.
Consider An Online Lender
Alternative online lenders have less stringent lending criteria. They rely less on credit scores and put more emphasis on other factors such as income, employment stability and DTI ratio.
You’ll have greater chances of qualifying for a personal loan with an alternative lender than you would with a bank.
Pay Down Your Debt
As previously mentioned, most lenders will look at your debt-to-income ratio to determine if you’re capable of paying an additional loan.
If the additional loan increases your debt by too much, your lender may think you are too much of a risk. As such, paying off other debts prior to applying can help your chances of qualifying for a personal loan.
Lenders look at a variety of factors to determine your risk as a borrower. As such, by offering collateral or a cosigner to sign the loan, you’ll be reducing the lender’s risk.
This security makes you a less risky borrower, which can help you qualify for a personal loan with better terms.
Apply Based On Your Qualifications
Generally, lenders will have requirements in relation to the borrower’s credit scores, income, and debt-to-income ratio. Be sure to ask your potential lender about these requirements prior to applying. This will save you from potential rejections and unnecessary hard inquiries
That was all on the personal loan for international students in Canada. Ultimately, whichever type of personal loan you choose to go for will come down to your needs as a borrower, especially as an international student.
But with the information above, you should be able to make an informed decision when you go to borrow. Do you find this information useful? You can send your response to us via the comment box.