What is a good credit score in Canada?
In Canada, the credit score range goes from 300 to 900. When the score is between 660 and 724, it is considered good. Everything above 724 is very good, while a score higher than 760 is considered excellent.
When the credit score falls below 600, most banks will refuse to lend the money to the borrower. Trust companies will refuse to do the same when the credit score exceeds 550. In such cases, borrowers can turn to private lenders.
What are bad credit loans?
These types of loans are designed for borrowers with bad credit ratings. When the report is far from ideal, or when a borrower has no credit history, the option that remains is applying for bad credit loans. Logically, these loans come with some downsides. They usually come with much higher rates. Also, compared to other loans on the market, bad credit ones have more significant restrictions. The restrictions are created to help the lender reduce the risk of not getting the money back.
What is a secured loan?
There are different types of loans on the market. Secured loans are supported by collateral, which can be any financial asset you possess. There are car loans, mortgage loans, etc. In such cases, your vehicle or a house is the collateral. The entire idea is quite simple. The lender will seize the collateral if you do not repay the loan in time.
Since you have a financial asset that can cover the loan in case you aren’t able to repay it, you’ll get the access to money you need fast. Plus, you can get a loan even if you have a bad credit score. Again, that’s because you have an asset that will secure the loan.
What’s the difference between secured and unsecured loans?
As explained, a secured loan requires collateral which is not the case for unsecured loans. Also, the approval of secured loans is based on your credit score. In addition, the loans that don’t require collateral usually have much higher interest rates.
When you have a bad credit rating, the chances of getting an unsecured loan are low. On the other hand, a secured loan is an option even when you have a credit rating that’s far from impressive. The financial asset that serves as protection makes a huge difference.
What are instant decision loans?
As the name suggests, instant decision loans are where borrowers, once they apply for the loan, get a quick decision from a potential lender. In most cases, you can apply online for these loans. The answer is usually given in a few hours. They are ideal solutions in situations when borrowers need extra cash urgently.
Is it possible to get an instant decision when applying for a bad credit secured loan?
Usually, getting the approval for the secured loan takes more time. Lenders must check the financial asset that will serve as collateral. With this being said, keep in mind that the process of getting a secured loan for bad credit can be as fast as some other options, especially when your rating is far from ideal.
Conclusion
A bad credit score can make the road to a loan you need long. Still, there are options you can go for. One of them is a secured loan where you use collateral, such as a vehicle, house, or any other financial asset you own. Keep in mind that bad credit secured loans need time to be approved. The lender has to check the asset before giving you the loan. That’s why the instant decision option is something you can hardly count on.
Aunt Piggyy
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