Do you want to work as an apprentice to pursue your dream career? Are you worried about paying for things during your training? Consider the Canada Apprenticeship Loan program.
It can help you get the financial help you need so that you can stress less and focus more on your studies. Then, you can pay the money back after you finish.
Keep reading to learn how the program works.
A Canada Apprenticeship Loan is a government program that helps you work as an apprentice in certain professions. The program allows you to obtain up to $4,000 per period of your training.
Apprentice loans don't start with interest, so you will only need to pay back the $4,000 or whatever amount you borrow upon completion of your apprenticeship. However, interest will build after you finish or otherwise stop your apprenticeship.
Canada makes the apprentice loan available in every province except for Quebec, but Quebec has an alternative available. The federal program is also available in all Canadian territories.
The Canada Apprenticeship Loan funds can go towards:
No matter how you choose to use the money, apprenticeships in Canada can be a great way to start your career or make a career change.
Many people can qualify for an apprentice loan, but you must meet certain requirements. You will qualify if you are:
You may substitute the block release technical training with an approved equivalent program. If you're applying for the loan for the first time, there will also be a credit check that you must pass.
Unfortunately, there are a few groups of people that the Canada Apprentice Loan specifically doesn't cover.
Understanding the eligibility requirements for the Canadian apprenticeship loan program can help you apply. Then, you can make sure you will qualify and can receive the funding you need.
The Canada Apprenticeship Loan can apply to a variety of Red Seal trades. Many trades fall under this category, including:
If your apprenticeship is in any of these or other Red Seal trades, you can qualify for the apprentice loan. Of course, you must also meet the other requirements, but having the right apprenticeship is a great first step.
Once you verify your eligibility, you can begin the application process. Consider how and when you can apply for a Canadian apprenticeship loan.
You can apply for a loan up to three months before your technical training starts. For example, you may apply as early as July 1 for training that begins October 1.
On the other hand, you have until the last day of your technical training to apply. Having that window is useful if you have unexpected costs and need more assistance during your training.
When you're ready to apply, you will go online to the Canada Apprentice Loan Service website. Register for an account so that you can fill out the application and submit it online.
You should also have your banking information within reach. Go through the application and submit.
Then, you will be able to use your online account to check on your application status.
If you don't want to apply online, you can print out the Canada Apprentice Loan Application and Agreement. You can read through the first few pages of the agreement to verify your eligibility and learn more about applying.
Next, you will fill out the application and provide information such as:
Make sure you make and keep a copy of your application for your records. You should also provide a photocopy of two of your IDs. Include those, the application, and supporting documents. You'll mail the application to:
Canada Apprentice Loan Service Centre P.O. Box 2061 Mississauga, Ontario L5A 4M4
While Canada Apprenticeship Loans don't rack up interest during your training, they aren't completely interest-free. Once you finish your program, you will have a six-month grace period to start repaying your loan.
After that, you will need to pay the loan back plus the interest that you have. If you want to avoid interest, you can work to pay off the loan during your training.
If you used direct deposit to receive the loan, the office may use the same account to withdraw your loan payments. However, you can also use another payment method if you prefer.
You'll need to contact the loan service before your six-month grace period ends. Then, you can determine how and when you will pay the loan back as well as how much your payments will be.
Consider how much money you borrowed, how much money you can afford to pay each month, and the payment method. It's also important to look at the interest rate for the loan.
Ideally, you would be able to repay the loan before the grace period ends to avoid interest overall. Another way to lower your interest is to pay more than the minimum because that extra can go toward your principal amount.
For example, consider taking out a $4,000 loan for one apprenticeship term. If you're able to pay the entire balance before the end of the grace period, you can avoid interest. Maybe that means paying off about $667 per month for the six months after you finish.
You might also decide to start repaying the money during your program if you have funds available. Perhaps you start two months before the end and pay $500 a month, ending right with the grace period.
If you have the same loan amount but don't start paying until the grace period ends, you will have a different situation. Perhaps you want to pay the loan off in a year.
Your monthly payment would be $341.42, assuming the interest rate is 2.45%. A loan repayment estimator can help you get an idea of how much you can expect to pay back.
If you struggle to pay your Canada Apprentice Loan, you have options. The government offers a few assistance programs, all of which require an application.
One option is the Revision of Terms measure, which allows you to lower your monthly payments. On the other hand, you can also use it to raise your payments to pay off the loan sooner.
You may also want to apply for the Repayment Assistance Plan (RAP), which helps reduce your payment amount. It may reduce your payments to zero, depending on your situation.
If you have a disability, you may also qualify for the Repayment Assistance Plan for Borrowers with a Permanent Disability (RAP-PD). With this option, you can also reduce your monthly payments, possibly to zero.
The RAP-PD also provides financial help for disability-related expenses. But it can be a good option to help pay off your apprentice loan.
One other way to help pay off your loan that doesn't require an application is with a tax credit. The government will send you the paperwork you need to claim a 15% tax credit on your loan's interest. Then, you may be able to pay slightly more to help pay off the balance.
The Canada Apprenticeship loan program is excellent if you need some financial help to cover expenses during your training. Not only can you use it for training, but it can help you pay for living expenses.
Then, you'll be able to train and start a job that you enjoy, and you can pay the loan back. But first, make sure the loan is worth it for you.
Do you need more help than an apprentice loan can provide? Use Insurdinary to compare personal loans.