Personal loans: Are you using the right lender?

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When it comes to personal loans in Canada, there is certainly no shortage of lenders out there. This can make loan comparison difficult for the average borrower. After all, with so many different providers to choose from, how do you pick the right lender?

In this article, we’ll compare four of the most popular companies when it comes to Canada loans. Each of them brings something a little bit different to the table. By going through this loan comparison, it should become easier for you to find a lender that fits your needs. 

Borrowell

Borrowell is one of the leading lenders in Canada for personal loans. While they claim to deal with a huge variety of borrowers, you are more likely to be accepted for one of their personal loans if you have a credit score above 660. This is not a lender for those with poor to average credit scores.

Borrowell’s loans start at $1,000, with the maximum being $35,000. Their interest rates sit between 5.6% and 29.19%. Loan terms are for between three years and five years, although you do have the option to pay your loan off early if you wish to do so. There are no early repayment charges.

Borrowell is known for being among the strictest of alternative lenders when it comes to requiring employment. While most other lenders require at least some form of employment, Borrowell states that you can only apply for a loan with them if you are earning at least $20,000 a year. 

It is worth noting that Borrowell is not actually a lender but more of a loan broker. Their job is to help you track down the best personal loans for your circumstances. They work with 50 different lenders to accomplish this. This means that most people should be able to find a loan through the platform. However, those with poor credit histories may not like the quoted interest rates. Also, Borrowell charges a loan origination fee on top of the loan, which can be as high as 5%.

Assuming everything is submitted properly to Borrowell, their personal loans are usually paid out within 48 hours of applying. However, do bear in mind that it won’t actually be Borrowell paying you. It will be one of the lenders they work with, and some of them can be a little bit slower in releasing cash.

To sum it up, Borrowell is the best option for personal loans if you have at least an average credit score and are in stable employment.

Mogo

If you are employed but not quite earning $20,000 annually (perhaps you have a part-time job), then Mogo Financial may be a better option for you. They require you to be earning at least $13,000 a year. They are also a bit laxer on the required credit score, but we will talk more about this in a short while.

Their interest rates start a little bit higher than Borrowell, sitting at a minimum of 5.9% and going up to 47.72%, which is an incredibly high figure. You can borrow up to $35,000 from Mogo, with smaller loans of a few hundred dollars also available. The minimum payment term is two years, and the maximum is five years.

Mogo Financial does not actually state a required credit score. Instead, they place more focus on your debt-to-income ratio. They require this to be no higher than 55%. As long as you meet that standard (and their employment requirements), then the chances of you being approved for one of their loans is high. Although, do bear in mind that if your credit score is woeful, you probably will be quoted a very high interest rate. 

Like Borrowell, Mogo Financial will also charge a loan origination fee. However, unlike Borrowell, they are not clear upfront about how much this fee is. 

Mogo Financial is also a little bit quicker at paying out money than Borrowell. Nearly all loans from Mogo are funded within 24 hours. 

In summary, Mogo Financial is ideal for those with middling to slightly poor credit scores, who may wish to borrow slightly larger sums of cash. If you have a fantastic credit score, you’ll likely find better interest rates elsewhere.

Fairstone

Fairstone offers both secured and unsecured personal loans, each coming with different terms attached. They have several branches throughout Canada. So if you don’t want to complete the application online, you can go to any of their branches and apply for a loan directly.

Most people who need Canadian personal loans are likely in search of unsecured personal loans. In this case, Fairstone can offer between $500 and $20,000 in loans. The interest rates start at 26.99% and can shoot up to 39.99%. The minimum term is six months, and the maximum is five years.

The low minimum amount you can borrow, coupled with the low minimum term, means that many people treat Fairstone loans as akin to slightly more affordable payday loans. So, if you’re considering a payday loan, then you may want to try your luck with Fairstone first. In fact, Fairstone can often pay out as quickly as some payday loans, with a good number of Fairtsone clients getting their money within 24 hours.

Fairstone is not really explicit about the credit scores they require. But considering their higher-than-average interest rates, this is a company that is likely best suited to those with below-average (but not awful) credit scores. Also, Fairstone requires you to be earning at least $1,500 per month to be able to apply.

Their secured loans are for those who wish to borrow larger sums of cash. The minimum loan amount for secured loans is $5,000 and the maximum is $35,000. Because it is a secured loan, the interest rates are lower too. They start at 19.99% and can go up to 23.99%. Loan terms are 3 to 10 years. Now, their interest rates are a touch higher than most other secured loans. However, this does mean that Fairstone is more likely to accept those with less-than-stellar credit scores as a result.

Fairstone is a company best-suited for those who want to borrow smaller sums of cash over a shorter period. As we mentioned, they do make a good substitute for payday loans. This lender is also a great option if you want to avail of a secured loan even with below-average credit.

EasyFinancial

EasyFinancial offers two types of loans. You have your traditional personal loan, as well as a special type of loan designed to help you improve your credit score. As you can probably guess, this is very much a lender focused on those that may have limited borrowing opportunities due to a low credit score.

Let’s start with their standard personal loan. With this, you can borrow between $500 and $15,000 for loan periods of between nine months and five years. Of course, the less money you borrow, the less time you will have to pay it back in. The interest rate sits between 29.99% and 46.96%, which means that EasyFinancial sits on the higher end of things in terms of interest rates. However, this is understandable given that their loans are designed for those with a poor credit history. 

The only real requirement that EasyFinancial has is that you have a stable job. They do not have strict income requirements, but your income and your credit score will definitely have a big impact on how much you can borrow.

It is worth noting that EasyFinancial isn’t 100% clear on the additional fees they may charge, and they appear to have more defaulting fees than most other lenders. So if you end up borrowing from EasyFinancial, then you should definitely make paying them back a priority. Even if you are just a dollar short on your monthly payments, the fees can be huge.

The second type of loan is the creditplus Savings Loan. You can think of this as more of a savings account. When you start a creditplus savings loan with them, you will be ‘loaned’ an amount of money (you will not actually be given this money). You will then repay this loan each month. Each repayment will help to improve your credit score. At the end of your loan term, you will be given everything that you paid back. At the 6-month mark, assuming you made your repayments on time, you will be handed $1,000 in a guaranteed loan.

The wonderful thing about the creditplus Savings Loan is that anybody can be approved for one, even without a credit history. So, if you have the money to pay into a ‘savings account’ each month and can wait six months to receive a loan, then this may be a decent option for you. You also have the benefit of improving your credit score at the same time.

Conclusion

The four loan companies mentioned above offer something completely different. Picking the right lender depends on your credit score, employment status, and how much money you need to borrow. The total interest and fees you need to pay can vary wildly between different lenders, so careful consideration is crucial if you want to get the best possible deal for yourself. There are also sites like Rate Genie that can help you compare and evaluate interest rates, so make sure to look at all your options before taking the plunge. Good luck!