What to know when taking out a personal loan

What to know when taking out a personal loan

Canadian household debt has reached $1.8 trillion, according to Equifax Canada statistics. That is up almost six percent over the previous year. However, it is not as big a jump as between 2016 and 2017, which saw over six percent increase in household debt.

The majority of debt Canadian consumers have been taking on include loans, mortgages and vehicle costs. Ontario has been the province to see the largest increase in household debt, while the provinces of Saskatchewan and Alberta have remained low.

“Even in the face of potential increase of interest rates, consumers across the country continue to borrow and spend to some degree,” Regina Malina, Senior Director of Data & Analytics at Equifax Canada was quoted as saying. “Their overall ability to pay back this money on time remains stable though. As interest rates gradually rise, and borrowing costs increase, this trend may be impacted over time.”

As the numbers show, more and more Canadian consumers feel confident in taking out personal loans and other debt, no matter what their age group. However, experts caution that borrowers need to be smart about the financial institution they deal with so they don’t take on more than they can handle.

This is why short-term loans, like those offered by Canadian personal lender, SkyCap Financial, may be a helpful resource for Canadian households. By offering SkyCap loans up to $10,000, consumers can get the funds they need and arrange affordable repayment options.

While many companies offer consumers small loans, they can sometimes come at a big price.

Here are some tips about what to look for in a personal loan provider.

  1. Know the details. Don’t borrow from companies that are vague or not upfront about the costs to you, the borrower. You have a right to know how much they can offer you as a loan based on the information you provided as well as all the repayment details. Always ask if there are any fees involved including late payment fees or even prepayment fees.
  1. Find out your credit score. Although this is not necessary when applying for a personal loan, knowing how strong your credit ranking is can help you negotiate the best terms from a lender.
  1. Limit the amount you borrow. You may need money now to help you with a negative financial situation, but resist the urge to take out more than you really need or can reasonably afford to pay back.

Practice safe borrowing

Recent industry trends have shown that Canadians have been taking on more and more household debt. The good news is that they have not been having trouble paying it back.

Equifax Canada has shown that delinquency rates have dropped, even while consumers have been acquiring more debt.

Thus, with some good planning and healthy borrowing habits, Canadians are able to access the funding they need without hurting their financial future.