How Do Personal Loans Work & Where to Get Them

Personal loans are a versatile financial tool that can help individuals manage various expenses. Many Canadians opt for personal loans when they need financial assistance, such as bill payments, renovation or repairs, and vacation funding. But how do personal loans work, and where can you find the best options to suit your specific needs?

Understanding how personal loans function will empower you to make well-informed decisions, ensuring that you get the financial assistance you require and do so responsibly. At GoDay, we aim to equip you with the knowledge and tools necessary to find the right loan for your circumstances, safely borrow money online and avoid making mistakes due to a lack of knowledge about the process. 

What is a Personal Loan?

A personal loan refers to an unsecured borrowing option provided by banks, credit unions, or online lenders to individuals, catering to diverse personal financial requirements. More people are now using personal loans for necessary expenses to simplify financial management. 

In contrast to secured loans, which demand collateral like a house or car, personal loans do not rely on any asset as security. This feature makes personal loans more inclusive, as they become available to a wider array of borrowers.

The interest rate on a personal loan and the amount a borrower can qualify for depend on factors like credit history, income, and overall financial health. It’s essential to carefully consider the terms and conditions of a personal loan before borrowing to ensure it fits within one’s budget and financial capabilities.

How Do Personal Loans Work?

If you’re debating whether to get a personal loan, it’s essential to explore a common question: how do personal loans work? The process typically involves the following steps.

  1. Application: The borrower is required to complete an application to obtain a personal loan. This application generally contains information such as income, employment history, credit score, and the desired loan amount. At Goday, we don’t require you to have a specific credit score or ask for proof of income to be eligible. 
  2. Evaluation: The lender decides if the borrower is eligible for the loan based on the provided information. But the good news is GoDay does not look at credit history for loan applications. We offer fast and efficient loans to help Canadians meet their financial needs without requiring a lengthy application or extensive process. As long as you meet our minimum eligibility criteria on our website, our automated system will approve you within minutes. 
  3. Approval and Terms: If approved, the lender offers the borrower a loan amount and presents the terms, including the interest rate, repayment period, and monthly installments. After the borrower accepts the terms, they proceed to sign a loan agreement. With GoDay, the approval takes minutes, and we disclose all the loan terms to you upfront to avoid surprises. 
  4. Disbursement: After signing the loan agreement, the lender transfers the funds to the borrower’s bank account, allowing them to access the loan. 
  5. Repayment: The borrower is required to make regular monthly payments to repay the loan within the agreed-upon period. These payments typically include the principal amount and the interest, which remain fixed throughout the loan term. 

Types of Personal Loans

Once you understand how personal loans work, you can start exploring the different types of personal loans available.

Unsecured Personal Loans

These loans lack collateral, and usually, the borrower’s creditworthiness plays a pivotal role in determining eligibility and interest rates. 

At GoDay, we follow a slightly different approach and don’t focus on creditworthiness. You can easily apply for a personal loan online without submitting any documentation. You have to meet a few minimum requirements to be eligible. 

Secured Personal Loans

Secured personal loans require collateral, such as a car, property, or savings account. The collateral serves as a protective measure for the lender, and if the borrower fails to repay the loan, the lender has the authority to seize the collateral to compensate for their losses.

Debt Consolidation Loans

Debt consolidation loans combine multiple debts, such as credit card balances or other loans, into a single loan with a fixed interest rate and payment term.

This can simplify payments and potentially lower interest rates, making it easier to reach your financial goals and managing everyday finances.

Medical Loans

These loans are specifically designed to cover medical expenses that insurance doesn’t cover. They may offer more flexible repayment terms and lower interest rates than credit cards, making them a viable option for medical treatments or procedures.

Unfortunately, many medical expenses don’t come with a warning, and we understand the need for quick access to cash during challenging times. GoDay offers access to same day loans in Canada, allowing you to fund emergency medical expenses within short notice. 

A few more types of personal loans are available in Canada, such as credit-builder, renovation, and emergency loans. Most of them follow the same procedure, and it’s important to make informed decisions regardless of the type of loan you choose. 

How to Get a Personal Loan?

Once you understand how does a personal loan work, you may be wondering how to get one. The following is a general guideline on how to get a personal loan.

  1. Assess your need: Determine why you need the personal loan and how much money you require. Be sure to borrow only what you can comfortably repay.
  2. Research lenders: Look for banks, credit unions, online lenders, or peer-to-peer lending platforms that offer personal loans. Compare interest rates, terms, fees, and eligibility criteria from multiple sources to find the best deal for your needs. The lender you choose may also depend on whether you want to get a small loan or a large one.
  3. Gather necessary documents: Some lenders will require certain documents, such as proof of identity, proof of income, and bank statements. Having these documents ready will speed up the loan application process. But if you’re looking for instant loans in Canada with GoDay, you don’t have to worry about gathering documents. We aim to streamline the borrowing process, so we don’t require you to submit any paperwork to qualify or apply for our online loans.
  4. Submit the loan application: Once you’ve chosen a lender, complete the loan application form. 
  5. Review the loan offer: Once your application is approved, the lender will present a loan offer that outlines the loan amount, interest rate, repayment period, and any relevant fees, such as origination fees. Take the time to read the terms and conditions before accepting the offer.
  6. Receive the funds: Once you’ve read the terms and accepted the loan offer, the lender will disburse the funds to your bank account. Depending on the lender, this can take a few business days. GoDay uses the fastest tools in the industry to ensure you get your loan at the earliest possible. If you apply during business hours, you will receive the funds within an hour. If you apply in the evening or during the weekend, the funds will arrive as soon as the next business day. 

How Much of a Personal Loan Can I Get? 

With GoDay, you can get personal loans ranging from $100 to $1,500. We consider different factors when reviewing your application to determine how much you qualify for. Personal loans can assist you in your journey of staying financially prepared, but it’s important that you borrow responsibly. Submit an online application to find out how much money you can get from GoDay.

Where to Get a Personal Loan?

Once you’ve gotten familiar with one of the most common questions, how does a personal loan work, you may wonder where to get personal loans in Canada. The good news is when you choose GoDay, you can get a personal short-term loan from the comfort of your couch. Follow the simple process mentioned above and submit a quick online application on our website. 

Choosing a Personal Loan

Personal loans are a valuable financial tool that can help individuals achieve their goals and manage unexpected expenses. By understanding how personal loans work and where to find them, borrowers can make informed decisions to secure the best loan terms. Once you get familiar with how personal loans work and how and where to get them, choosing the loan that fits your needs will be simpler. Feel free to contact our dedicated customer service team if you need assistance!