People with bad and tarnished credit usually have fewer options compared to those with good and excellent rating. In Quebec, there are finance companies and other providers that offer short-term loans based on income and assets.
Options for Borrowers
Finance companies offer different options to borrowers with less-than-perfect credit, among which unsecured personal, secured, and payday loans. Payday loans go with short terms of 3 – 4 weeks to several months and very high interest rates. This is a last resort for emergencies such as late utility bills, medical emergencies, etc. A better option is to apply for an unsecured personal loan as the rate is lower compared to payday providers. However, the rate is still high and can vary from 30 to 40 percent, depending on the amount required. Amounts vary from $1,000 to $15,000. If you borrow $15,000 at a rate of 35.99 percent, for example, you will pay $156 weekly for a period of 60 months. Finance providers usually offer lower rates of about 20 percent for secured loans in the range of $15,000 – $25,000. In this case, if you borrow $25,000 at a rate of 19.99 percent, you will only pay $133 weekly over a period of 120 months. Secured loans, however, require some form of collateral or guarantee, which can be your home, mobile home, vehicle, or another asset of value. Some finance providers also accept land and trailers. However, only assets that are insured and paid out in full can be used as collateral. Borrowers qualify provided that they don’t have any outstanding loans. The good news is that the loan amount depends on the value of the collateral and not on credit rating.
A secured savings loan is a fourth option to look into if you have tarnished credit. In this case, borrowers are not required to pay the balance in full but it is important to make the minimum payment when due. A secured credit card is one alternative to bad credit loans and a way to rebuild credit with regular and timely payments. Many finance companies and banks in Quebec offer secured cards to customers with limited or no exposure and poor credit. The credit limit depends on the deposit made, and the deposit itself serves as a guarantee.
How to Apply
The majority of finance companies offer the option to apply online via a simple application form. Providers often advertise easy and hassle-free application process and instant decision. Applicants are also free to contact the provider by phone or visit a local branch of their choice. Borrowers are asked to provide financial, employment, and personal information such as income source, loan purpose and amount, whether they get paid on a monthly, bi-weekly, or weekly basis, etc. Your income source can be a combination of welfare, child tax benefit, disability income, pension income, employment insurance, part-time or full-time employment, and so on. Finance companies are also interested in whether you own or rent and whether you have declared bankruptcy or are in a debt management program. With some providers, applicants are asked about the loan purpose, for example, the purchase of an asset, car repairs, emergency expenses, or unpaid bills. Finally, you will be asked about your gross monthly income and whether you need a micro or regular loan.