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loans  

If you're a student, you may qualify for special bank and government student loans, as well as scholarships / bursaries / grants. 

Click on the icon to join Xork and sprint through loans. It should take you about 10 minutes.

If you don't know exactly how much you need, or when you need it / when you'll repay it, a line of credit may suit your needs.

Should you lease or borrow to finance the purchase of a vehicle?

​If you have student debt, or need to borrow money,

learn how to deal with it responsibly.  You'll have to pay it back.​

What are your options if you fall into debt and it becomes overwhelming?

what will you use the money for?

Is it something you need or something you want?


There's 'good' debt and there's 'bad' debt. ​


 Don't borrow money to make impulsive purchases, like an expensive car or the latest designer purse. Good reasons to borrow include:

  • Furthering your education (college/university/other qualifications) - getting a degree or acquiring new skills can increase your earning potential. 
  • Advancing your career / profession - buying essential tools for your job (appliances, machines, gear / equipment, etc.). A tool is essential if it will help you earn more.
  • Covering a temporary shortfall - you may have irregular income / are going through a rough patch. If you won't have income coming in for a short while, borrow money to keep yourself afloat until your next paycheque.
  • Emergencies / dire straits - sometimes big unexpected expenses / events occur (medical/dental emergencies, car repairs, losing your job, legal fees, etc).
  • Leasing / buying a car.
  • Buying a home / condominium (this is a special kind of loan, called a mortgage loan).


'Bad' debt can also mean expensive debt.​​​

How much do you need? 


You'll need to check with lenders if they are willing to lend you the amount you need.


Lenders will only approve you for as much debt as they think you're able to 'service' (which means to make regular payments as scheduled until you repay the entire amount). 

  • To do so they will want some information about you to assess how credit-worthy (loan-worthy) you are.
  • Your credit history can negatively affect how much money banks are willing to lend you. ​​​


If a lender isn't willing to lend you enough / any money, consider asking somebody to co-sign your loan. If you fail to make payments, they'll have to make them for you. 

  • It doesn't matter who makes the payment. As long as it's made, both your credit histories will be positively affected, as if you had both taken, then repaid the loan.
  • Likewise, if neither of you makes a regularly scheduled payment, both your histories will be negatively affected. 

Click on the diagram to find out how loans work.

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Should you rent or use a mortgage loan to finance the purchase / construction of a home?

 when will you need it?


If you need the money right now, a loan may be your only option.


If you don't need the money immediately and can afford to wait a little, consider saving more by cutting down your expenses / getting some extra income, or finding a cheaper alternative.  You may be able to reduce the size of your loan or avoid borrowing entirely.


If you know you'll need to borrow in the future, plan ahead and shop around - find the best deals. You may not have this luxury if you're caught by surprise. ​

how it works

key features


Interest Rate

This is the cost of borrowing money.

  • It is measured as a yearly percentage of the loan's outstanding principal (what you have not yet repaid) - the more you've repaid, the less you’ll pay in interest.
  • You'll pay interest regularly to your lender until you've repaid the entire principal.
  • The higher a loan's interest rate, the more it'll cost you. 
  • Interest can stay the same until you repay the loan (called a "fixed" rate) or it can change over time (called a 'floating' or 'variable' rate).


Term of the loan
This is the amount of time, usually in years, over which you agreed to pay back the entire principal.

  • The longer you take to pay your principal, the more interest payments you'll make, and the more expensive your loan becomes in the long run. 
  • The advantage of taking longer is that your principal  payments will be smaller and more manageable. This is especially important if you have a tight budget and cannot afford to make large payments. 


Payment Terms

For most loans, you'll have to start making interest / principal payments immediately. 

  • Some loans let you briefly defer payments (student loans, for example, don't require any payments until you graduate). 
  • Some loans allow early principal payments, called pre-payments.
  • Some let you 'skip' one payment per year without penalty. It's just a payment deferral - you still owe the skipped payment.


You and your lender will agree on how often you'll make interest / principal payments.

  • Principal is usually repaid partially, in regular chunks. 
  • Payment frequency can be weekly, bi-weekly, semi-monthly, or monthly. 
  • The more often you make principal payments, the faster you'll pay back your debt and the less you'll pay in interest overall.

Thinking about borrowing money?

​​What will it cost you?


The interest rate banks charge depends on how credit-worthy you are (based on your credit history), as well as current economic / market conditions. The lower the interest rate, the less your loan will cost.


Lenders compete with one another for your business by offering lower interest rates or more favourable payment terms on loans.  You should check with a few lenders and compare their offers before signing any loan contract - especially for larger loans.

​​

You can lower the cost of borrowing by giving the bank 'security'. This means pledging an item you own, like your car / house / investment portfolio against the loan. If you stop making payments, your lender will eventually repossess the pledged item. There is no such risk with an unsecured loan. As a result, unsecured loans are more expensive than secured loans.​​

If you have Canada Student Loans, you won’t have to pay any interest for six months. You’ll need to check whether this also applies to your provincial student loans.


If you borrowed money from a bank and feel you may not be able to make interest / principal payments when due, contact them.

  • Banks said they will work with their customers on a case-by-case basis.
  • Some banks are planning to allow mortgage payment deferrals – for as much as six months. It’s not clear if interest payments will be waived or not. A mortgage is a special type of loan used to buy a condominium or a house.


Lenders are changing their procedures.  For example, you may be able to apply and complete loan transactions, even mortgages, remotely.  Even at traditional (as oppoed to online-only) institututions, bankers are available by phone or video.  In provinces where electronic signatures are permitted, documents can be exchanged and signed electronically.


If you need to borrow money, make sure to shop around - check the interest rate on loans with a few banks.  While, in general, the level of interest rates has fallen, some banks have taken away promotional rates - which means the cost of borrowing may actually have risen.

What's changed because of the coronavirus pandemic?

What's Next?

​Xork was recently admitted to a college in the Zanthar galaxy. He isn’t concerned about the cost. “I’ll just..."

Having steady income and good credit history will help you secure a more favorable loan.

No lenders expect students to have either.

what is it?


A loan (sometimes referred to as 'credit') is borrowed money.  

  • When you take out a loan, you get money - called "principal". 
  • You'll have to pay it back and, usually, it won't be free.


Most loans / lenders have you repay the principal (what you borrowed) in small regular payments.


You can can borrow money from most financial institutions (like banks, credit unions, and independent loan providers) by signing a loan contract.

  • You can also borrow money from friends and family. 

They're multiple choice - always choose the most appropriate answer. 

If you need cash to purchase a specific item, consider a personal (also called 'term") loan.