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Personal loans in Manitoba: the basics.

Personal loans can be a great way to get an extra cash flow to pay big (and sometimes unexpected) expenses, such as car repairs or home renovations.

However, there are many nuances to personal loans to be aware of — including the different types and terms available — before signing a contract.

It is important to do your research first to find the best deal for your specific situation. LowestRates.ca is here to help.

Read on for an overview of personal loans in Manitoba so you can make an informed decision.

Your question about Manitoba personal loans, answered.

How do I get a personal loan in Manitoba?

Banks used to be the go-to place for personal loans, but third-party alternative vendors have come a long way in providing useful options for those looking to borrow money.

Non-bank lenders

What they are: Alternative lenders include private companies that can sometimes be online-only. To cater to customer needs, they may offer more varied or niche packages than banks. This is the kind of lender that LowestRates.ca can refer you to in just a few minutes.

What to expect: Alternative lenders, unlike banks, may be open to considering less traditional qualifiers, such as your credit score, in their decision on whether to lend you money. These qualifiers could include your grades and GPA, bank account balances, personal spending habits, or job history. However, because third-party vendors are not federally regulated, it is important to read the terms and conditions of your loan carefully before signing an agreement.

What you need: Each vendor will require slightly different information, but you will most likely need to provide identification, proof of income, contact information, and potentially your most recent tax returns.

Bank loans

What they are: Not only are bank loans are a more traditional route to get a loan, they’re federally regulated. You will have to sign an agreement saying you’ll repay the loan within a certain period of time and make regular payments called instalments, along with interest and other fees. Personal bank loans can be as high as $50,000 and as low as $100. The term can be between 6 and 60 months, depending on the loan’s purpose.

What to expect: Since bank loans are federally regulated, the banks must give you certain information, such as the interest rate, whether it is fixed or variable, the term, and other fees and service charges. Banks will also often check your credit score and debt levels when determining whether to give you a loan and what your interest rate will be.

What you need: Most banks will need proof that you have a regular income, a bank account and a permanent address.

What types of personal loans can I get in Manitoba?

Loans fall into two major categories: secured and unsecured.

Secured loans

With secured loans, you put up what is called ‘collateral.’ These are assets such as your car or home that the lender can repossess if you don’t make your payments.

Unsecured

Unsecured loans don’t require collateral but come with their own risks, such as litigation from the lender if you don’t repay it in time.

Other loan types:

Fixed-rate loans

Fixed-rate loans are when the interest rate and payment amount are consistent over time, making them easier to incorporate into your budget. Most personal loans offered have fixed rates.

Variable-rate loans

With variable-rate loans, your interest rate may change over time, and is often determined based on the wider market. Lines of credit often use variable-rates.

Debt consolidation loans

Debt consolidation loans are when all of your debt, or at least most of it, is compiled into one loan with a single payment schedule and interest rate. These loans can be easier to qualify for but often have higher interest rates.

Co-signer loans

A co-signer loan is when somebody, such as a friend or relative, helps you get a loan you couldn’t qualify for on your own by using their own credit history and score. This makes the co-signer responsible for your loan.

Payday loans

A payday loan is a short-term loan of no more than $1,500 that has to be paid back within 62 days if there is no extension or renewal.

You also must pay back the loan from your next paycheque and will face fees and interest charges if you can’t pay it back.

It is easy to fall into financial trouble if using payday loans for ongoing costs, such as rent or groceries, as the debt can quickly add up.

When should you apply for a personal loan in Manitoba?

Consolidate credit cards - You could get a personal loan to consolidate multiple credit card debts into one monthly payment, which could make your interest rate lower than the individual rates for your credit cards.

Refinance student loans - A personal loan could give you a lower interest rate than your student loan’s interest rate, but you will lose the tax advantages of a student loan and will not qualify for any loan forgiveness program introduced in the future.

Finance a purchase - Getting a personal loan and paying for an item in cash could be a better deal than pursuing financing through the seller, but be sure to compare thoroughly which provides a better deal.

Pay for a wedding - Paying for a wedding with a loan could save you a considerable amount on interest charges rather than paying for it on a credit card, which often has higher rates.

Improve your credit - If you have a lot of credit card debt, a personal loan could improve your credit score by diversifying the types of loans you have. A personal loan can also raise your credit limit, which can improve your score as well.

Top up your RRSP - You can contribute 18% of your earned income to an RRSP every year until you turn 71, but most Canadians don’t. A personal loan can use up your RRSP contribution room.

How are personal loans different from personal lines of credit?

A personal line of credit allows you to borrow as you need the money, no more and no less, and you pay interest along the way. It is useful if you don’t know your total costs and don’t want to borrow more than you might need.

On the other hand, a personal loan is a lump sum of money that must be repaid based on an agreed schedule, with interest. They often have lower interest rates than lines of credit.

How are personal loans regulated in Manitoba?

In Manitoba, only lenders licensed through the Consumer Protection Office are authorized to provide high-cost credit products such as loans and lines of credit, as outlined in the Consumer Protection Amendment Act of 2013-2014.

Manitoba’s laws are meant to ensure consumers get a full and clear overview of the costs associated with their loan before they sign an agreement, can cancel an agreement within 48 hours and can pay back the loan early without fees or penalties, if they desire.

According to the law, lenders must disclose the principal amount of the loan, its term, the APR, the annual interest rate, the associated fees and the borrower’s cancellation rights.

For payday loans, Manitoba has special legislation that outlines that borrowers cannot be charged more than $17 per $100 borrowed in interest.

What are the main advantages of a personal loan?

  • You can often borrow more with a personal loan than with a credit card, often up to $100,000, compared to a limit of around $5,000 that most credit cards offer.
  • Personal loans can help consolidate your debt into one monthly payment and interest rate.
  • Personal loans often have lower interest rates than credit cards — around 5% for unsecured personal loans compared to more than 10% for most credit cards.
  • Unsecured personal loans offer the opportunity to default on the loan without repossession of belonging.
  • Personal loans are easier to budget for, given a predictable repayment schedule and fixed interest rates.