There are many reasons you may need to borrow money such as remodeling your kitchen, buying a new car, paying off credit card debt, helping the kids pay for university or making a major purchase. Depending on your borrowing need, here are some options to consider on your loan or line of credit.
1. Closed-end loan vs. open loan
Fundamental difference: Open loans don't have any prepayment penalties while closed-end loans do. In other words, if you try to make a payment other than the exact monthly payment, you'll be charged a fee if you have a closed-end loan but not if you have an open loan.
CIBC offers only open loans, meaning you can prepay any amount of the loan that you wish without incurring penalty fees. You can also choose to pay the loan off in one lump sum or even adjust your payment schedule, allowing you flexibility and freedom in your repayment plan.
2. Secured loan vs. unsecured loan
Fundamental difference: Secured loans mean your loan is backed by collateral such as your house or investments whereas unsecured loans are not backed by any collateral.
Of course, there's a little more to it than that. Here are some quick comparisons of secured and unsecured loans: