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Understanding the requirements for a personal loan in Canada
When applying for a personal loan, banks assess the risk they take by extending you financing. If you have a poor credit score and payment history, financial establishments will consider you a high risk borrower
As part of the application process, you will need to present your personal information. You may be asked to show your driver’s license and social insurance number. The lender will use this information to check your payment history, run a credit report, and look at your current level of debts. Most lending institutions will require a credit history about 700 or so, but some may accept a lower credit score. A lower credit score also means that they will charge you a higher rate of interest.
The bank may also want to check your bank activity over the last couple of months, verifying that you have made timely payments to your lenders. The lender may also check for overdrafts, showing you do not overextend yourself.
Naturally, your financial institution will want to make sure you are currently employed. To this, you will have to provide recent pay stubs. This piece of information is important as it allows the lending institution to assess your debt-to-income ratio. Your current debts are taken together with the payments on the new loan. They are calculated against your income in order to determine your ability to repay the loan.
The bank will require proof of income, but this will be different if you are self-employed, employed, or unemployed. Copies of recent paycheck receipts are sufficient if you are employed. If you are self-employed, however, you may need to present copies of tax presentations. This will serve as proof of income. If you are unemployed, you can apply for a loan with disability and unemployment benefits, but keep in mind that only certain lenders offer them.
There are two obvious requirements – you have to be of legal age and a Canadian citizen. Some banks may have different requirements for self-employed individuals, self-employed professionals, and salaried persons. And some financial institutions may have a maximum age of applicant requirement as well as minimum employment requirement. It may be a minimum of one year in the present organization and a minimum of two years of employment in total.
The lender may also require that you prove residence. This can be in the form of a bill on your name, sent to the address you have provided. Some banks require that the applicant has a fixed phone line, but this is disappearing as a requirement.
Naturally, requirements for a personal loan vary from one bank to another. To apply for a personal loan with CIBC, for example, you should be of the age of majority (18 years for QB, MB, ON, PEI, and AB and 19 years for NB, NL, BC, NS, NT, YK, and Nunavut). You should also meet the credit lending criteria of the bank and should not have filed for bankruptcy over the past 7 years. In addition, you should not have an application for credit declined from CIBC over the last 6 months and earn $17,000 or more a year. Other conditions may apply. The minimum loan amount you can apply for is $3,000, and the loan can be used for a specific purchase or purpose.
When you apply for a personal loan, you will have to present credit card numbers, bank account numbers, and other financial information. This includes financial obligations and income. If you meet your bank’s requirements, it is not difficult to apply for a personal loan. You can apply in the local branch, online (this will take you no more than 10 minutes) or by phone.
For more information visit Your Loan here: http://www.yourloan.ca/