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What is a constant payment personal loan?

 Constant payment personal loan – Definition

A fixed payment personal loan is a certain amount of money that you borrow from a financial institution and that you will have to repay in fixed installments on a weekly, bi-weekly or monthly basis (depending on the terms of your loan).

This type of loan can be used for a variety of reasons, whether it's to consolidate debt, renovate your home, build an in-ground pool, plan your wedding or simply finance your education, there are almost no limits. on how you can use a fixed payment personal loan.

Constant payment personal loans are offered by a multitude of different financial institutions, including traditional banks, alternative lenders and online lenders.

Fixed payment personal loans are not secured loans. This means that you do not need to provide collateral to obtain the loan. It is, therefore, the opposite of a mortgage or any other type of loan that takes your house, your shares or anything else as collateral. Since the loan is granted without collateral, the lender bases its decision to lend to you or not on your credit score, income, credit history and debt-to-income ratio.

If you don't have a good enough credit or don't qualify for a loan for some other reason, you can always apply with a guarantor or, rather, find a secured loan. These two options will help you secure a better loan if your personal financial situation is not ideal at the time of application.

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 However, don't forget. When you apply with a guarantor, if you miss a payment, the guarantor will be responsible.

Constant payment personal loan – Example

For example, imagine that you receive a constant payment personal loan of $10,000 with an annual interest rate of 6% and a repayment term of 36 months.

In this case, your monthly payment will be $608.44 and the total paid in interest at the end of the repayment term will be $1,903.84.

For the same loan, imagine now that you have the option to repay it in 60 months. In this case, your monthly payment will be $386.66, but the total amount paid in interest at the end of 60 months will be $3,199.6. Your monthly payment will therefore be lower, but you will pay more in interest.

 Advantages and disadvantages of a constant payment personal loan
Here are some advantages and disadvantages of a constant payment personal loan:


1. Loan flexibility

Do you know that the personal loan is one of the only types of loans that allows you to spend the amount borrowed on pretty much anything? Indeed, for example, a mortgage can only be used to acquire a property, a car loan only to buy a car, etc. The personal loan can be used to consolidate debts, pay school fees, finance surgery and almost for any other expense. However, do not forget to read the conditions of your personal loan carefully so as not to make an expense that is not allowed by the contract.

2. No collateral needed

One of the reasons why many opt for personal loans is because the personal loan often does not require collateral. This means that the equal payment personal loan is an “unsecured” loan. To get the loan, you just need to have adequate income and a good credit history. Conversely, “secured” or guaranteed loans are loans that require some collateral to qualify. For example, the mortgage takes your house as collateral. If you miss payments, the house will be foreclosed by the bank.

 3. Predictable monthly payments

Constant payment personal loans have a very specific repayment schedule and, if you have chosen this option, the interest rate remains fixed. This means that each month, you will have to repay exactly the same amount. No need to do calculations each month or change your budget to accommodate a variable repayment.

4. Easier to manage

One of the most popular reasons Quebecers request a personal loan is to consolidate their debts. Debt consolidation is when you use a personal loan to consolidate all of your other debts (often credit card debt) into one loan. A single loan, with a lower interest rate and more reasonable payment terms. Debt consolidation helps you reduce your monthly payments and get rid of bad debt faster.


1. Impact on your credit report

When you apply for a personal loan, the lender should apply for impact credit. This means that your credit rating will be affected for at least one to two years. The impact is still minimal, but if you have a bad credit rating, it is an impact that does not go unnoticed.

In addition, if you miss one or more repayments on your personal loan, you will, once again, even lower your credit rating.

It is very important to never miss payments. We advise you to use all the tools that are available to you such as alarms, reminders in the calendar, setting up automatic payments and any other tool you have.

 2. Fees and penalties

Personal loans not only have interest rates that you must pay, but lenders also often charge account set-up fees, transaction fees, and a host of other possible fees and penalties.

Additionally, some lenders charge prepayment loans from your balance, which prevents you from repaying your personal loan up front without losing out.

3. Interest rates can be high

Interest rates on constant payment personal loans are not always the best compared to alternative financing options. This is especially the case if you have a bad credit score. In some cases, the interest rate of the personal loan can even be higher than that of a credit card.

 What is the average rate for a personal loan?

The average interest rate for a personal loan varies between 5% and 45%.

This depends on several factors including your debt/income ratio, your credit rating, the terms and the amount requested as well as many others. One thing to know is that, according to Canadian law, the interest rate cannot exceed 60% (with the exception of a few types of loans, including payday loans).

How monthly payments affect your credit rating?

The monthly payments you will make to pay off your credit rating have an impact on your credit rating. Here's how:

  • Making your payment on time increases your credit rating.
  • Missing a payment lowers your credit rating.
  • Paying off the entire loan boosts your credit rating.


It is always important to manage any credit you have well. Whether it's a personal loan, credit card, or mortgage, if you don't want a negative effect on your credit rating, treat all of these loans the same. Never miss a monthly payment, break terms of use, etc.

If you're looking for a personal loan, try our loan comparison tool to find the best personal loan for you!