Hi All,
In today’s episode, I am going to discuss “Loans & Lines of Credit for Canadian Millennial Professionals”.
My top 3 tips for using Loans & Lines of Credit as a Canadian Millennial Professional are:
1. Determine what you need the money for
How do we determine if a loan or line of credit is right for us? We make sure that we know what we will need this money for.
Unexpected expenses can arise every now and again. With the help of a loan or line of credit people can pay off an expense like:
-A new vehicle
-School Tuition
-A trip
-A wedding
-Consolidate exisiting debt
-Renovate your home
Now the above are just a few examples. The main thing to keep in mind is that loans are a one time installment.
This means that once you borrow the money you need and the amount is used up, you will need to re-apply for another loan if you need additional funds.
In most cases, you can borrow up to $50,000 for a loan since loans are unsecured that is the max that the majority of banks set for their loan amounts.
Conversely, a line of credit is a very nice option since you can reuse the funds as much as you like. You don’t need to re-apply if you need additional funds, you would just ask to increase your line of credit.
2. Determine the type of debt you can afford
After you have determined what you need the money for, now we need to figure out whether a loan or line of credit is the best fit.
Now for loans you pay a fixed or variable rate of interest based on your credit score, repayment history, and level of income.
Lines of credit you only pay interest on the money that you use and the interest is determined based on your credit score and the going rate for the bank you applied through which is also known as the bank’s prime rate.
3. Determine if a Loan or Line of Credit is right for you
The final step of my top tips is to determine if a loan or line of credit is right for you. Not all credit products are treated equal. Loans are a one-time installment and can only be applied for once at a time. If you only need to borrow funds once and awhile loans are a great fit.
If you wish to borrow funds on an ongoing basis or just want some funds available for emergency sake a line of credit may be a great fit. You only pay on the balance you use and if you have good credit, repayment history, and level of income you will be in a good position to borrow the funds you need.
The main lesson to keep in mind about credit products is financial discipline. If you don’t need the funds for something important or for emergency sake, only utilize cash. The less debt we carry, the richer we become.
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Blog Posts- Wed each week
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Cheers, Alex
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DISCLAIMER: All information provided by Alex Muir is of a general nature and is spoken from Alex Muir’s personal experiences, and personal opinions on the topics related to fitness, health, and education only. No information is to be taken as medical or other health advice pertaining to any specific health or medical condition. You agree that use of this information is at your own risk and hold Alex Muir harmless from any and all losses, liabilities, injuries, or damages resulting from any and all claims.
