Among the various types of loans available in Canada, personal loans are considered as the most popular type. The process to apply is easy and fast. Whether you have an outstanding bill to pay or want to buy an expensive commodity, you can quickly borrow up to $5,000 on easy terms and conditions.
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Personal Borrowing
In a personal loan, a lump sum is paid to the borrower, which they must repay in form of installments. The rate of interest, amount of each installment, and the duration of the loan are pre-decided. Hence, they are easy to manage for the borrower.
Applying For Loans With A Consigner
Everybody believes that people who do not have a good credit score cannot apply for loans. However, this is untrue as a special type of loan is available for people who have a low financial score. There are numerous private lenders in Canada who are ready to offer you money on easy terms but there are also certain conditions to be met for an individual to get approved.
If an individual is unable to meet the conditions, she/he has another option at there disposal to get the money. It includes getting a cosigner on board.
Who is A Cosigner?
A cosigner can be termed as a partner in borrowing money. Once they have consigned an application, they become equally responsible for repayment of the money. Thus, a missed payment not only adversely affects the borrower’s credit score but cosigner’s as well.
Benefits of Getting A Cosigner
Here are some of the major benefits of getting a consigner:
Approval Rate
The basic benefit of having a cosigner is that you can get your application approved rather easily provided the cosigner has a good credit score.
Lower Rate of Interest
Due to the good credit history and score of the cosigner, you may end up borrowing at a low interest rate. This is no less than a blessing for an individual who has a low score as it is hard for them to find a lender who is willing to approve them.
Credit Score Building Opportunity
Getting a cosigner on board can help you to build your score. Once you have got the funds, make a point to pay all your installments on time. This will lead to an improvement in the credit score.
Risks
Getting a cosigner on board also comes with certain risks. The most prominent one, as discussed above, is that their credit score can be affected. In case of a secured loan, their assets are also at a risk.
Furthermore, they may lose money as well if the primary borrower fails to pay back installments on time. Thus, to save their financial score from being impacted or protect their assets, they will have to repay the money from their own pocket.
A Final Word
A cosigner can prove to be of great help. However, this option comes with certain responsibilities for the primary borrower. If you believe you will be able to handle these responsibilities, only then opt for this option to get your application approved.
