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What is Bad Credit Loan?


Wikipedia says that credit history or credit report is, in many countries, a record of individuals or company's past borrowing and repaying, including information about late payments and bankruptcy. The term "credit reputation" can either be used synonymous to credit history or to credit score.

This article will provide useful facts about implications of bad credit history, obtaining loans for bad credit and lending regulations in Canada.

What are the Implications of Bad Credit History?


People with bad credit history need bad credit loans. These are secured loans and used to pay for previous unpaid loans. It is similar to consolidating loans into one. Sometimes it happens that the people who avail of loans are not able to make payments on time. The reasons could be bad financial standing or simple refusal to pay. When the creditors file legal cases against them, it is the time that they realize their mistakes. The bad credit loans become the primary option and are then taken into consideration.

How do you Obtain Loans for Bad Credit?


Loans for bad credit are easy to find. The amount of loans is too much. They are not able to pay back the loans and the creditors file the interest rate according to the default rate. The options are bad credit loans, consolidation loans or assistance from debt management companies. Hiring debt management companies can be the best alternative.

For Canadians with bad credit sometimes payday lenders are the only place they can turn to. Getting a loan with bad credit can be extremely challenging especially when you are dealing with the wrong facility. A Debt Consolidation loan is a personal loan that allows consumers to merge many debts into one. If you have three credit cards, you may be able to eliminate your credit card debt by obtaining a Debt Consolidation loan to pay off the credit cards. This means that you only have one payment each month instead of three.

What are Lending Regulations in Canada?


Lending regulations have been instated in Canada to provide borders and guidelines to payday lenders. The Canadian government has determined that over the years, payday lenders have been charging over 60% interest. This is not allowed and considered a criminal offence as the Criminal Code of Canada states. These regulations have been set in place to eliminate “loan sharking” which is illegal in Canada. In 2010, the government proposed to change the mortgage lending laws. The first provision was that new borrowers will qualify for a five-year fixed term rate mortgage. This will be put in place to protect Canadians by giving them flexibility. It also supports payments at higher interest rates for years to come. Another provision is that the maximum amount that you can refinance your property will be lowered from 95% to 90%. This is meant to help homeowners save money. The last is the increase in down payment from 5% to 20. This will surely have a huge impact on Canadians with bad credit. The market is not providing any ways for Canadians to work on their bad credit by allowing them to purchase homes with small down payments, or to be considered for a loan in banking institutions.

The Truth about Loans


Loans should never be considered as solutions for getting your financial condition on the right track. The ideal financial status can only be realized o achieved if you can control your wants, stick to your needs and resolve financial issues within the budget you make out of your own salary and other undertakings. By doing this, you will be able to live a quiet life without threats from creditors or experiencing the pressures of paying back your loans.

References


wikipedia.org
zimbio.com
bankloansca.com

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