Lines of Credit



Unexpected expenses always tend to creep up when you least expect them. If you don’t have extra funds available in your bank account to fall back on, a Line of Credit may be a suitable option for you.
 
Product Facts

You only pay for what you use.

Your minimum monthly payment is the interest charged at the end of the preceding month.

Loan interest rates fluctuate and are based on the VPCU Prime Lending Rate.

A line of credit is conveniently attached to your bank account, which is also known as “overdraft protection”. This provides you with a safety net in the event unexpected charges or expenses arise.

There is no penalty or fee should you decide to pay off the balance of your line of credit at any time.

Lines of credit are available on a secured and unsecured basis.
 
Questions & Answers
 
1. If I don’t have money available to pay for some upcoming expenses, is it better to get a line of credit instead of withdrawing from my RRSPs?
 
Withdrawing from your RRSP will typically result in those funds being added into your income tax calculation for the year. Based on comparing current Canadian income tax rates with line of credit interest rates, this is likely more costly to you. Our best advice would be to discuss your income tax situation with a financial planner or tax consultant and inquire about the best rate that may be available to you from your financial institution.
 
2. What kind of rates do you offer?
 
Interest rates are based on the VPCU Prime Lending Rate. Rates offered for lines of credit are based on a Borrower’s risk profile, business relationship with VPCU and whether or not there is collateral held as security against the credit facility. Please contact us for more details.
 
3. I always have plenty of funds available in my account and am never overdrawn. Why should I have a Line of Credit setup?
 
Almost everyone will encounter some form of unforeseen expenses at some point in their life. Unexpected changes in employment, extraordinary vehicle or child care expenses, and among many other things, tend to present themselves when we least expect them. There are often other times when we get extremely busy and forget simple things like ensuring enough funds are in our bank account to cover upcoming payments and cheques that will debit our accounts. Having a line of credit will save you money by preventing overdraft charges and/or NSF fees in the event your account becomes overdrawn.
 
4. Is it a good time to apply for credit when you need it or when you don’t need it?
 
Ideally it is best to apply for credit when you are in a position of strength. What this means is that your employment history has shown consistency for the past two years, you have a positive net worth and you have managed your existing credit well. Having said that, at VPCU we will always explore all credit options available to you no matter what situation you are in. We have assisted many members with a wide array of challenging situations and have helped them toward greater financial health.
 
5. I just got approved for a line of credit. What’s the best way to use it?
The general rule is to pay off or pay down the credit product that is charging you the highest interest rate first. Credit cards and loans from alternative financing companies typically have much higher interest rates than line of credits at most financial institutions. In the event, you have a credit card balance at a high rate and/or a pay day loan, it is best to use your line of credit to pay off, or at least pay down, those respective credit products as soon as you can.
 
6. There are many other pay day loan and alternative financing companies advertising heavily in the market right now. Are they a good alternative to borrow from instead of a more conventional financial institution?
We would strongly recommend that anyone seeking credit contact their local financial institution first. Many of the alternative financing options that are available today have extremely high interest rates and hidden fees. In some cases, the interest rates and fees on the loans offered exceed even those of credit cards.
 
7. Does VPCU charge any loan processing fees for line of credit applications?
VPCU does not charge any loan application processing fees. The only fees we may charge are for property appraisals and property registration, which we are in turn billed for.
 
8. How long does it take to get a loan approval?
Once you have provided us with a completed loan application form and the required income verification documentation, we will respond to your request within 1 – 2 business days. Response times will vary depending on the volume of requests. The most efficient way to submit your request is to email the signed and completed loan application form along with your income verification documents to loans@vpcu.com
 
9. I can’t make it into the branch to sign documents or chat with a Loans Officer because of my unusual schedule. What can I do?
You can send us the loan application form by printing it off, completing and signing it and scanning it to us via email at loans@vpcu.com or directly to a lender you may be working with. We will correspond with you accordingly from there. Should your request be approved, and as electronic signatures are now accepted, all required documents would be sent through Docusign for you to sign via email. Please read about our Docusign service by clicking here.
 
10. I am hesitant to apply for more credit, but I want to improve my finances. What other options do I have?
Sometimes a financial review along with some adjustments to budgeting can address a cashflow situation. At VPCU, we would be happy to review your budgeting and offer our best advice free of charge, no strings attached. It should also be noted that our staff do not have sales targets nor earn commissions on any products sold so you can rest assured knowing that we have your best interests in mind at all times.