Many Canadians prefer using personal loans for emergency expenses or buying expensive items. They can use it to pay off credit card balances or previous loans or buy a vehicle. However, not everyone is eligible for a personal loan. This is because different creditors and financial institutions have different loan requirements. Some factors they consider are the applicant’s credit score and annual income.
Creditors analyze these factors while reviewing personal loan applications. So, before you start researching for a personal loan, you need to familiarise yourself with eligibility criteria, qualifications, and the documents you need to submit. This information will help you streamline the application process and improve your chances of qualifying for a personal loan.
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Documents you need to submitted
During the initial personal loan application and the loan verification process, your lender might ask you to submit your documents. You can usually proffer these documents electronically by submitting a scanned copy.
1. Personal loan application
Each lender has a unique application that you need to fill out to initiate the loan process. For example, you can complete the entire application process online if you apply for a personal loan from an online lender. On the other hand, if you borrow from your local bank or a Credit union, you can either fill it out in person by visiting the branch or fill up the form on their official website.
The initial application is quite simple, and general information will be required. You will be asked to fill out personal information like:
- Your name
- Phone number
- Address
- Qualification
- Date of birth, andÂ
- Social security number.Â
On the application, you might also need to fill out the amount of money you want as a loan and the purpose of your loan. Some creditors might ask you to fill out additional details like your approximate monthly income, rent, or mortgage payment.
While filling out the application, ensure that you fill in all the correct details carefully, as it will be duly verified.
2. Address proof
Evidence of your living situation will help the creditor understand your lifestyle. The following documents will act as your income proof:
- Motor registration card
- Utility bill
- Bank or any available credit card statement
- Rental agreement or lease document
- Insurance proof of your property
- Insurance proof for your vehicle
- Mortgage statement
If you need to change your permanent address information at any time, you can always visit your local authority, which can help you with this process. The online process is preferred because it is fast. However, you can also visit your local post office and complete the process in person.
3. Identity proof
Apart from cases like identity theft, lenders should be able to verify your identity to determine whether you are a legal resident or citizen of Canada and you are at least 18 years of age. With the identity, the financial institution also confirms that you have a valid and active bank account with any of the National Banks of Calgary. To prove your identity, you need to offer two forms of identification such as:
- State-issued identity card
- Driver license
- Passport
- Social security card
- Military ID
- Certificate of citizenship
- Birth certificate
You are always advised to make 2 to 3 copies of your identity cards so that you do not have to submit the original to the creditor. Once the copies have been made, ensure that you store the original identity cards in a safe place so that you do not lose them.
4. Employer verification and income verification documents
Personal loans are unsecured and different from other types of loans like mortgage or auto loans. Therefore when you apply for a personal loan, you do not need to submit any collateral to back the loan. However, this increases the lender’s risk and makes it even more crucial for them to verify that you have a steady source of income and can repay the loan within the time limit.
If you are traditionally employed, or you work with a company, you can easily verify your income by submitting the following documents:
- W2s and 1099s
- Paystubs
- NOC from your employer
- Bank statement
- Tax return statements
- Employer contact information
On the other hand, if you are self-employed and you have your own business, you can verify your annual on monthly income by submitting these documents:
- 1099s
- Income tax return documents
- Bank statements
To get your tax forms and pay stubs, you can visit the official website of your employer and log into your payroll provider’s online database or contact your office’s payroll department or human resource department. On the other hand, if you work with a CPA or any other tax professional, they can also help you find the tax forms.
You can get copies of your bank statement online after visiting the official website and login into your bank account. However, you can also contact your bank if you cannot find the statements online.
Other important information that your lender might need
1. Credit Score
Once your loan application is approved, the lender will perform a hard credit check on your credit score and history. This will temporarily affect your credit score, and it might stay on your report for a couple of years.
You might be eligible for a competitive and lower interest rate if you have a good credit score. But you might need to pay higher interest rates if you have a lower credit score.
2. Purpose of loan
Most credit unions and financial institutions are not concerned about how you will use the loan amount. However, it will help them suggest the best loan per your financial needs.
Some creditors might also offer specific personal loans like home improvement loans or debt consolidation loans.
Endnote
Before you submit your loan application to a specific creditor or lender in Calgary, you need to understand their eligibility criteria. They can help you with the documents required to process your loan request. Before filling out the personal loan application, keep the documents in hand and ensure you have copies. This will avoid any delays and will simplify the application process.
