Having an apprenticeship is a great way to start your journey into the career world. As an apprentice, you will learn a new trade through a combination of hands-on and classroom training.
Many students enjoy working as an apprentice because unlike regular schooling, you get paid to be on the job. In Canada, if you work as an apprentice, you can apply for an interest-free loan. But what are these loans for and how much can you apply for? Let’s take a look:
What is an Apprenticeship Loan?
As mentioned above, an apprenticeship loan is a loan that is offered in Canada to those who hold an apprenticeship position. These loans are available for students to help them pay for living expenses, equipment, tuition, and tools related to their career and schooling. In Canada, an apprentice can apply for up to $4,000 per training period.
Apprentices can also apply for what is known as a “Loans for Tools” program which is available to aid in the purchase of tools and equipment required to succeed within an apprenticeship position.
Are Apprenticeship Loans Interest free?
Apprenticeship loans are interest-free up until the point that you complete or leave your apprenticeship program. In addition, you will not be required to make any payments on your loan until your position is complete.
In most cases, you will also have a six-month grace period once your apprenticeship is complete in which you will not be required to repay your loans unless you so desire. Once this six month grace period is over, repayments will begin on a monthly basis.
How do I repay my Apprenticeship Loan?
Once your 6 month grace period is complete, it’s time to start repaying your loan. You can repay your loan much like you would any other type of loan through online or telephone banking, or through pre-authorized payments from your account.
During the last month of your non-repayment period, you should be contacted by mail regarding your loan details. Your loan statement should include details regarding the amount owing, when repayment will begin, your interest rate, your monthly payment amount, how long it will take to repay your loan, and how your loan will be paid.
If you are having difficulty repaying your Apprenticeship loan, there are also some options available to you including the Repayment Assistance Plan.
Will I receive a tax credit for my Apprenticeship Loan?
Yes, for each year that you are in repayment you will receive a 15% tax credit on the interest paid. You should receive the documents necessary to do so through the mail when tax season arrives.
If you are interested in applying for an Apprenticeship Loan, you can do so via My Canada Apprentice Loan online service account. Here you can find out if you are eligible for an Apprentice Loan, and learn more about managing and repaying your loan here in Canada.
Applications can be completed online, but are subject to strict deadlines. All applications must be submitted 3 months before your technical training starts.