September 18, 2019, 8:10 am

What Are the Basic Requirements for Obtaining Loans in Ontario?

by: The Financial Blogger    Category: Personal Finance
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Many people are surprised at how many options for financing are available today. This is especially true for people who don’t have much in the way of established credit or are currently rebuilding damaged credit score after experiencing some sort of financial reversal. What does it take to obtain personal loans in Canada or other types of loans? While there are some variants between lenders, the following qualifications are often applicable.

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You Must Be of Legal Age

Typically, no individual who is under the age of 18 is able to obtain financing without the help of a co-signer. A parent or other relative who is willing to sign the loan with you will work if you are underage and want to finance something like purchasing of a vehicle. Your co-signer would be responsible for repaying the loan if you were to default.

Keep in mind that not all lenders will extend financing to those under the age of 18 even if someone is willing to co-sign the loan. Before submitting an application, it never hurts to ask about the lender’s policy on this point.

Residents of Canada Only

People who are residents of other countries are usually not eligible to receive financing. You will need to confirm that you are in fact living in the country before your application is considered. There are some lenders who offer what’s referred to as “New to Canada” financing. This type of lending arrangement is targeted towards those who are seeking to become permanent residents rather than those who are temporarily living in Canada.

If you’re not sure that a lender would consider you to be a Canadian resident, outline your circumstances, including if you are seeking citizenship or plan to remain in the country with the proper documentation for several years. The lender will determine if you can be eligible for a loan based on those factors.

You Must Have a Verifiable Bank Account

It’s essential that you have a bank account that the lender can check and determine that it’s active and in good standing. This is important for two reasons. First, the funds from an approved loan may be deposited directly into that account. Second, even if the funding goes directly to an automobile dealer or some other type of creditor, the lender wants to know that you have a bank account that will be used to remit installment payments on the loan balance.

Different lenders will require various types of information in order to confirm your active bank account. Some may be happy with a copy of your most recent bank statement. Others will collect basic information about the account and then contact the institution directly. Once the bank confirms that you do have an active account, you meet this qualification.

Proof of Your Identity

Be prepared to provide documentation that confirms your identity. This may be in the form of a driver’s licence, some type of government-issued identification that includes your image, or even a picture ID confirming you are currently a student at one of the universities in Canada. There are some lenders who would accept an employee-related picture ID, provided there is other data that helps to ensure you are the person that you claim to be.

Verifiable Sources of Income

Many people assume that the only source of income that lenders will consider is a steady full-time job. In fact, it’s not unusual for lenders to consider multiple sources of income other than wages and salaries. When you approach lenders about the qualifications for Ontario loans, ask for examples of what income sources they accept.

What are some of the more common income sources that lenders accept? Along with income from your job, money from pension funds, federal and provincial benefit programs like the Guaranteed Income Supplement or Compassionate Care Benefits, and monthly disbursements from trust funds are likely to be accepted.

One key to using various sources of income to meet the lender’s qualifications is making sure those funds are directly deposited into the bank account that you’ve provided. Proof of direct deposit, along with the amount of the monthly benefit or income, will often be what you need to give the lender a reasonable sense of security that there is money to help you make those installment payments.

Documentation to Confirm Your Permanent Residence

One final requirement that most lenders need is confirmation of your permanent address. This can be in the form of a utility bill, credit card statement, or some type of tax form. If your living arrangement comes with utilities included in the rent, a letter from your landlord confirming that you do in fact live at the address provided will often suffice.

Keep in mind that some lenders may or may not place emphasis on your current credit score. Some lenders are willing to work with people who have experienced credit issues in the past and are currently working to regain their good credit ratings. If the first lender you try does not work out, don’t hesitate to try a different one. Your efforts have a good chance of paying off in terms of getting the money you need and adding a positive reference to your credit reports.

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