Approximately one-third of Ontarians depend on the Ontario Disability Support Program (ODSP), which provides financial and employment assistance. Unfortunately, the benefit amount isn’t always enough to cover life’s expenses, let alone the cost of unexpected expenses.
Fortunately, there are ways to get access to financing when money is tight. With the right lender and a solid plan, your ODSP income can help you access emergency funds when you need them most. Here’s what you need to know about getting a loan while on ODSP.
Key Points
- The ODSP program provides financial assistance to Ontario residents with a qualifying disability.
- If you’re currently collecting ODSP benefits and need a loan, you’ll need to work with a lender who accepts this non-traditional form of income.
- With the right planning and organized documents, you should still be able to get approved for a loan while on ODSP.
Can You Get A Loan While On ODSP?
Yes, it is possible to get a loan while receiving income from the Ontario Disability Support Program (ODSP). However, ODSP is a fixed government income, so some lenders may view you as higher risk compared to traditional employment income. As such, you may need to apply with an alternative lender with more flexible requirements instead of a bank.
That said, you may face higher interest rates and may need to provide additional documentation. Keep in mind that all lenders have different requirements, so it may take more time and effort to find the right one.
| What Is The Ontario Disability Support Program (ODSP)? The Ontario Disability Support Program offers both financial and employment support for adults with disabilities living in the province, who require assistance and meet the qualifications. A single individual under the program can access up to $1,408 a month, though you may receive more based on your situation, including shelter type, number of dependents, and marital status. |
See How Much You Qualify For
What Type Of Loans Can You Get On ODSP?
There are a handful of loan options available while you’re collecting ODSP. However, you’ll need to find a lender who accepts non-traditional forms of income. Here are some that may be available to you:
Personal Loans
These types of loans are fixed-amount loans that are repaid over a set term via equal monthly payments that consist of both interest and principle. Personal installment loans are often used to cover larger expenses, such as car repairs, home repairs, or medical emergencies.
Depending on the lender you choose, you could qualify for an ODSP personal loan of $10,000 or more. However, the amount depends on the lender and your financial situation. Interest rates on personal loans also tend to be lower compared to other loan types, like payday loans.
| Tip: If you have an asset, like a car or house, you can use it as collateral to improve your odds of getting a loan. A secured loan tends to come with lower interest rates and higher approval chances due to the lower risk for the lender. However, these loans come with the risk of losing your asset if you default. |
Zero Interest Loans
There are various lending services that offer small amounts of cash with zero interest charged. These lenders accept bad credit borrowers and generally base their approval on your income, including income from government benefits.
| MoneyUp | MoneyUp offers up to $1,000 with no interest or credit checks. |
| Nyble | Nyble offers a zero-interest line of credit up to $250. |
| Bree | Bree offers up to $500 with no interest or credit checks. |
| KOHO Cover | KOHO Cover offers a cash advance of up to $250 without interest-free or credit checks. |
Payday Loans
Payday loans are small, short-term, high-interest loans that typically must be repaid on your next bi-weekly payday. These are fast and very easy to qualify for, even if you have bad credit or non-traditional income.
Unfortunately, with ODSP payday loans, you can only qualify for a maximum of $1,000 to $1,500, depending on the lender. Moreover, lenders will not lend more than 50% of your income after taxes. Plus, they’re very expensive and are best used only for short-term emergencies.
Where Can You Get An ODSP Loan?
Depending on the lender, some may accept disability benefits and other sources of income, such as government benefits and self-employment income.
- Amount
- $300 – $35,000
- Rate
- 9.99% – 34.95%
- Term
- 6 – 84 months
- Amount
- $100 - $1,500
- Rate
- $14.00 per $100.00
- Term
- 14 to 62 days
- Amount
- Up to $1,500
- Rate
- $14 per $100
- Term
- Up to 60 days
What Do You Need To Qualify For A Loan With ODSP?
Most lenders want to see that you can afford the loan on top of all your other financial requirements.
- Consistent Income That Can Cover Your Payments: ODSP provides a stable monthly income, which some lenders may recognize as a reliable source of funds for a loan.
- Low Debt-To-Income (DTI) Ratio: Your debt should be low enough relative to your income to handle another payment on top of your existing debt.
- Credit Score: Some lenders check credit, which reduces their risk and increases your chances of loan approval. However, many still accept low credit, as long as other factors (like income or assets) check out.
- Bank Account: Having an active bank account is typically required for loan approval, as lenders often use instant bank verification (IBV) as part of the application and approval process.
What Documents Do You Need To Provide?
When applying for an ODSP loan online, you won’t need to provide as many documents due to instant bank verification.
They may ask for a government-issued ID to prove your identity and address. This can be in the form of a driver’s license or passport, among others. In rare cases, they may ask for additional documents to ascertain the stability or amount of your ODSP payments.
How To Apply For A Loan While On ODSP
To apply for a loan while on ODSP, follow these steps:
Step 1: Review Your Finances
Before applying for an ODSP loan, you should review your finances and credit score to see how creditworthy you are. If your debts are really high and your credit score is low, it may be worthwhile to improve your credit and lower your debts prior to applying.
You can check your credit score for free using Loans Canada’s CompareHub tool to see where you currently stand.
Step 2: Research Lenders And Get A Quote
Comparing lenders before applying is one of the best strategic moves you can use to get the best rate for you. Many lenders offer free loan quotes, which you can use to compare different loan offers. This can potentially save you hundreds of dollars in interest.
Step 3: Complete Your Application
Once you’ve gathered your documents and researched your loan options, it’s time to complete your loan application with the lender of your choice. Once you submit your application, you may get a response instantly or within 24 hours notifying you if you’ve been approved.
If approved, most lenders will fund you the money within a few minutes to hours via Interac e-transfer.
How To Improve Your Chances Of Getting Approved For A Loan While On ODSP
When your income comes from ODSP, it means you’re in a unique financial situation. This can sometimes make the loan application and approval processes a bit more complicated.
To increase the chances of your loan getting approved, consider the following:
Improve Your Credit Score
Improving your credit score shows lenders that you can manage your debt responsibly, even while on ODSP income. It can also help you secure lower interest rates and better loan terms.
To give your score a boost, pay all bills on time, keep your credit card balances and utilization rate low, and check your credit report regularly for errors.
Lower Your Debt-To-Income Ratio
If you already hold too much debt, then getting another loan can be difficult. That goes for anyone, regardless of their income.
Lenders look at your debt-to-income ratio, which measures how much you owe relative to how much you earn. The higher your debt-to-income ratio, the less likely a lender will approve your new loan.
Add A Co-Signer
Getting a trusted friend or family member with strong credit and finances to co-sign your loan is a great way to increase your chances of getting the financing you need.
When you apply, your co-signer’s credit and finances will be under the microscope, rather than your own. Once approved, you should receive a loan and interest rate, both of which will vary depending on your co-signer’s financial strength.
It’s important here to be aware of the consequences for not honouring your loan agreement. Not only will you be subject to penalties and interest rate hikes when you start missing payments, but your cosigner will be obligated to pay the balance owed should you go into default (when you can’t afford your payments at all). This could potentially cause severe debt for both parties involved or strain personal relationships.
Shop Around
If you have specific loan needs or are in a unique financial situation, it’s in your best interest to shop around for a lender that can offer you the best deal, especially given that you’re collecting ODSP in lieu of a traditional income. Do your research before you settle on a loan or a lender. Get multiple quotes and compare them side-by-side.
Should You Take Out A Loan While On ODSP?
The decision to take out a loan while on ODSP should not be made hastily. Given that you’re on a fixed income, you want to make sure that you’re not adding more debt to the pile than necessary. Remember, anything you borrow has to be repaid later.
As such, only take out an ODSP loan if the financial need is justified. Here are a few good reasons to take out a loan while on ODSP.
- To Finance A Vehicle: When you live in Ontario, the chances of needing some type of vehicle to get around are very high, especially during the winter and if you have a physical disability. Almost all Canadians, regardless of their income status, need a loan in order to afford a vehicle; being on ODSP is no exception.
- To Pay For A Medical Emergency: Dealing with any medical expense, emergency or not, can be very expensive. Getting approved for the loan you need is often the difference between getting the help you need and going without.
- To Cover An Unexpected Expense: Life happens, and more often than not, it’s very expensive. Getting an affordable loan to help cover those costs is often the only option for many consumers.
- To Pay For Repairs: Often repairs pop up out of nowhere. Whether they’re for your house or your vehicle, if you need to get something fixed as soon as possible, an affordable installment loan is a great option.
Ready To Apply For A Loan? Be Sure To Consider This:
Do you also work, in addition to collecting ODSP payments? If so, you can use both your ODSP and employment income to qualify for a loan.
In fact, using both forms of income can boost your chances of loan approval by strengthening your income. And, working while on ODSP won’t affect your benefits.
More specifically, you can earn up to $1,000 per month from employment without affecting your ODSP eligibility, benefits, or income support.
| Watch Out For Scammers Predatory lenders tend to lurk in the alternative lending sphere, making it more important than ever to ensure you’re working with a reputable lender. To find a legitimate lender in Ontario, use the provincial government’s online database. |
Final Thoughts
Getting approved for a loan while on ODSP is doable with the right preparation and lender. By organizing your documents, proving regular income payments, and exploring flexible loan options, you can improve your chances of loan approval. Just remember to carefully consider whether a loan is justified and that you can comfortably cover regular loan payments on a fixed income.
