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RBC offers unsecured (traditional personal loans) as well as secured loans.
- The unsecured loans don’t require any sort of collateral or insurance to be placed against the loan by the borrower. .
- Secured loans require that the borrower put up some form of collateral, usually a house or some other large, valuable asset. This ensures that, should the borrower find himself unable to pay, the bank won’t lose (at least not entirely) the originally borrowed sum.
- Most unsecured loans from RBC are used in the case of first-time applicants, applicants who may pose a credit risk, or both.
In terms of repayment, both of these loan types come in two categories: Fixed-rate & variable rate. This means that the interest charged to borrowers will, in the case of fixed rate loans, stay the same throughout the entire repayment period. This is nice, because you know exactly how much your payment will be each month. Variable rate loans, by contrast, can see their interest rates rise or fall, based upon the Prime Rate. This means payments might increase or decrease suddenly. However, amortization rates adjust accordingly, so that even if your payment rises, your loan will be paid off more quickly.
PERSONAL LINES OF CREDIT
Like loans, personal lines of credit come in two forms at the Royal Bank of Canada: Secured and unsecured. The definitions are largely the same, but since credit lines work a bit differently than loans, here’s a quick overview.
- Unsecured lines of credit from the Royal Bank of Canada are, like their counterparts in the loan department, absent the need to post collateral in order to obtain them. However, that’s where the similarity largely ends. For instance, unsecured loans have a minimum of $5,000 CAD, and a maximum cap / limit of $50,000 CAD, based upon the financial standing of the borrower. Interest rates applied to the loan are also based on financial standing.
- Secured lines of credit, in contrast to their secured counterparts, are usually given to newer applicants, either because they lack a credit history, or because their credit history may cause the bank to view this loan type as the most prudent option. Secured credit lines at the Royal Bank of Canada are based upon the security provided, which, in this case, is your home, or more specifically, your home’s equity. Your secured credit line can be up to 80% of your home’s value, after applicable mortgages and other obligations are taken into account.
Both credit lines are revolving, which means that re-paid money becomes immediately available to the borrower. This saves both the bank and the borrower the time and hassle of a tedious and repetitious re-application process.
It’s worth noting that both credit lines are attached to a variable interest rate, and will fluctuate as the Prime Rate does.
LOAN & CREDIT LINE RELATED INSURANCE
While so-called “creditor’s insurance” doesn’t exist within the framework of the Royal Bank of Canada’s lending structure, borrowers can take advantage of LoanProtector Insurance. This program allows for modification of the borrower’s repayment terms in the event of injury, unemployment, or other calamity. This helps borrowers protect their credit rating, their financial standing, and their peace of mind.