Applying For A Loan With The Canada Child Tax Benefit

Applying For A Loan With The Canada Child Tax Benefit

Written by Bryan Daly
Fact-checked by Caitlin Wood
Last Updated December 2, 2021

2016, along with the election of our new Prime Minister, Justin Trudeau, marked the start of several changes to our country’s policies on income taxes and other government benefit programs. This included some notable adjustments to the C.C.T.B. (Canada Child Tax Benefit), which as of July 20th, 2016 is officially renamed the “Canada Child Benefit” (CCB). 

We receive questions every day about a variety of different types of loans and the application processes that come with them. One question that we frequently receive is: “Will I qualify for a loan if I’m currently receiving the Canada Child Benefit?” While the answer to this question varies from lender to lender, here’s how you can use your Canada Child Benefit income to qualify for a loan.

What Is The Canada Child Benefit (CCB)?

The Canada Child Benefit is a government program that provides families and single parents with financial assistance. It is a tax-free payment that families or single parents can apply for when they have a child or children who are currently under the age of 18. 

The amount you can get through the child tax credit is dependent on certain criteria, including: 

  • How many children you have 
  • How old your children are
  • How much income you make annually
  • What is your martial status

The maximum amount you can get under the CCB program is:

  • $6,833 per year for each child under the age of six.
  • $5,765 per year for each child between the ages of 6 and 17 years old.  

Parents who have a child with a physical or mental disability can also qualify for an extra $2,915 per year for each child under the Disability Tax Credit (DTC).

Can You Get A Loan With Your Canada Child Benefit?

Though any loan you take out is typically dependent on your income, employment, and credit history, you may be able to use your CCB as leverage to get a loan. Since your CCB is considered as part of your income, you can use it as a means to qualify for a loan. However, to get approved for a loan while on CCB, you’ll need to find a lender that accepts child tax credit as a form of income. 

Personal Loans Or Installment Loans That Accept Child Tax

Personal loans (a.k.a installment loans) have lower interest rates and longer repayment periods than a payday loan, so it tends to be cheaper and more manageable to pay off. When you get a personal loan, you’ll receive a lump sum of cash that you’ll have to repay with interest in equal installments over a period of time. 

Main Features Of Personal Loans Or Installment Loans That Accept Child Tax

  • Personal Loan Amount – When you apply for a personal loan that accepts child tax as a source of income, you’ll be able to qualify for a larger amount than with a payday lender. These amounts can easily range between $300 to $10,000.
  • Interest Rates – Interest rates on child tax loans are also lower than payday loans, making them a better option. The most a lender can legally charge you in Canada is 60% (APR).
  • Term Lenght – One of the main reasons a personal loan is more affordable, is becuase it has loan terms than can extend to 5 years or more.
  • Loan Requirements For Personal Loans That Accept Child Tax– Depending on the lender you apply with requirements may vary. For example, while one lender may require a good credit score, another may not. Similalry, while one lender may require you to be employed, another may simply require a stable source of income.

Payday Loans That Accept Child Tax

Taking out a payday loan that accepts child tax (a.ka. baby bonus payday loan) is becoming increasingly popular amongst cash-strapped parents. CCB payday loans are easy to get but should only be taken out in emergencies or in small amounts as interest is accrued immediately. 

Main Features Of A Payday Loan That Accepts Child Tax

  • Payday Loan Amount – You can only borrow up to $1,000 to $1,500 with payday lenders. However, that amount can shrinks further as some provinces limit the amount you can borrow up to 50% of your net income. 
  • Interest Rate – One of the reasons payday loans are recommended as a last resort is due to their high-interest rates and fees. APRs for payday loans that accept child tax can go as high as 600% or more. 
  • Term Lenght – Another aspect to consider when getting a payday loan is the loan term. Payday loans have extremely short terms, most varying between 15 and 30 days.
  • Requirements For Payday Loans That Accept Child Tax – Most payday lenders require proof of income, a valid bank account, and proof of identity to qualify. Most lenders also do not require a credit check, which makes it a good option for those with bad credit.
Maximum Payday Lenders That Accept Child Tax Can Charge You
Ontario, British Columbia, New Brunswick and Alberta $15 per $100 borrowed
Manitoba and Saskatchewan$17 per $100 borrowed
Nova Scotia $19 per $100 borrowed
Newfoundland and Labrador $21 per $100 borrowed
Prince Edward Island $25 per $100 borrowed
Note: Payday loans are extremely expensive and can lead to a cycle of debt if you’re unable to repay the full amount borrowed. To Learn about the payday loan laws in your province, click here.

How To Apply For A Loan With The Canada Child Benefit

4 Easy Steps To Apply

Calculate your Debt-to-Income Ratio

This is a good way for both you and your lender to know if you are financially stable enough to deal with the cost of a child tax credit loan. Add together the average total cost of your monthly loan payments and other debts, then divide it by your regular monthly income. You’ll then have your debt-to-income ratio. Ideally, your ratio should come out to 30-35%, lower if possible. If your ratio is higher than that, it might be a better idea to hold off on applying until you and or your spouse can increase your income or reduce your debt.

Do Research and Shop Around for Lenders

Once you know you’re financially capable of taking out a loan, you can start your search. There are many different lenders catered to all types of borrowers. Some have stricter qualification standards, such as a high credit score. If you don’t have a high score, there are other lenders out there that don’t use your credit score as a deciding factor. Similarly, there are lenders out there who do and do not accept non-traditional forms of income like the child tax credit, CPP, and other government benefits. Before applying with any one lender, make sure you meet their minimum qualifications for a child tax credit loan.

Get Pre-Approved

If you’ve found a couple of lenders that accept the child tax credit as income, you can find out how much you qualify for by getting pre-approved. Most lenders offer this, and you can do so by simply filling a quick online application. If you’re unsure of who you should apply with, you can use a loan comparison website like Loans Canada. With a single application, you can get pre-approved with multiple lenders. Doing so will allow you to review your options and choose the one that best suits your needs.

Fill Out The Application

Depending on which lender you choose to work with, you’ll need to provide some additional information to complete your application. This includes personal identification and proof of income. You may also need to provide your bank statements and undergo a credit check.

Best Lenders That Accept Child Tax Credits As Income

AmountAPRTerm
(Months)
Types of LoanFunding Time
Lending MateUp to $10,00043%36 – 60 Guarantor loanWith 24 hoursMore Info
Magical CreditUp to $20,00019.99% – 46.8%6 – 60Personal loanSame dayMore Info
LendDirectUp to $15,00019.99% Open-endLine of creditSame dayMore Info
iCashUp to $1,50015% – 23%Payday loanWithin 24 hoursMore Info
Captain Cash$500 – $75028% – 34.4%3Short-term loanSame dayMore Info
CashMoney$100 – 10,0006 – 60Line of creditWithin 24 hoursMore Info
Cash 4 You$1,000 – $15,00046.93%12 – 60Personal loanWithin 24 hoursMore Info

Child Tax Credit Loan Eligibility Requirements

When it comes to the majority of lenders, whether they’re banks or other organizations, the qualification standards will vary from loan to loan. The standards for the clients they take on, however, will remain relatively the same. In other words, what any legitimate lender will want to know, first and foremost, is that you’re financially stable enough to pay back whatever amount of money they’re letting you borrow, along with any interest charges that apply. Depending on your chosen lender, their application process might include them checking:

  • Your credit (report, history, and score)
  • Your financial records (history of debt/bankruptcy, income, debt, etc)
  • Your employment history (usually from the last 2 years)

While these categories are likely going to be the most important points to check off, other qualification areas might be subject to inspection, so it’s best to have all your financial and personal information updated and organized prior to applying. 

Tips To Help You Improve Your Chances Of Qualifying For A Child Tax Loan

  • Find a Trusted Co-Signer. Getting a close friend or family member to co-sign your loan application can help increase your chances of approval. Just make sure that they are also financially stable and ready for the lender’s review process.
  • Look Into Guarantor Loans. With these loans, which are meant for borrowers who can’t get approved at all, you would definitely need a co-signer to help you. A guarantor loan will also be easier to get, since your co-signer’s credit will be checked instead of your own. By co-signing your loan, they’ll be agreeing to take over the remaining balance in the event that you can no longer pay it, so make sure they’re aware of this before you apply. If your co-signer’s finances are strong enough, you may even receive a better interest rate. In addition, you’ll be able to improve your credit gradually, as long as you’re keeping up with your payments.
  • Check Your Credit. As we said above, many lenders don’t check your credit before approval, but doing it yourself is a good way to know if you’re financially stable enough to handle going into debt.
  • Pay Off Your Other Debts. This is one of the most important things to do before making any financial decisions. If you already have other debts (credit card bills, etc.) it’s best to pay them off before applying for a loan. If you can pay your debt and still afford the loan, it’s safer to apply.

Are you and your family eligible for the GST/HST tax credit this year?

When Can A Child Tax Benefit Loan Help?

There are many reasons why people need to apply for loans. Even when the Government is giving them a bit of extra money each year, families who are currently benefiting from the Canada Child Benefit are no different. In fact, depending on the parent or parents’ current income and how many children they have, it can be very hard to support a family while dealing with all the other expenses one might have, like a mortgage, car payments, etc. Some parents might even need a loan just to cover the costs of their daily expenses, such as groceries, rent, or utilities.

It can be especially hard for single parents making one income to earn enough to both raise their children and finance their home, a car, and other necessary expenses, so a loan can help out greatly during times of financial uncertainty. Particularly when it comes to families with multiple members involved, parents and children alike, emergency situations of all sorts might arise, whether they’re medical or financial, that could require a loan to help cover the costs associated with whatever that situation might be. 

Are You Eligible For The Canada Child Benefit?

To be eligible for the CCB, you must have a child under 18 years of age under your primary care and be a Canadian resident. Parents that are eligible can apply online via their CRA accounts or submit the RC66 CCB application form. 

In order to continue receiving these benefits, you must submit your income tax returns every year, no matter what your income is, even if you aren’t currently earning any income. This rule also applies to your spouse or common-law partner, if you have one. 

How Will You Recieve Your CCB Payments? 

Once the parent is approved for the benefit, they’ll receive the payment in monthly installments via direct deposit or cheque, from July of that year until June of the following year. Once the parent and/or their spouse/common-law partner have filed their income tax returns, the sum of their benefit will be recalculated that coming July, based on the details of their return, until the child or children reach the age of 18.

Canada Child Benefit FAQs

Will applying for a loan decrease my Canada Child Benefit?

Taking out a loan while receiving Canada Child Benefits will have no effect on the amount you currently receive. Why? Because a loan is considered a debt and not income.

Can I apply for a loan online? 

Yes, there are many lenders available online. Just make sure to read customer reviews and look for the lender in the Better Business Bureau database to confirm that they are a real company.

What is a baby bonus payday loan?

A baby bonus payday loan is essentially a very short-term loan based on the amount you receive from your Canada Child Benefit.

What documents do I need to apply for a loan that accepts the child tax credit? 

Whether you apply for a personal loan or a payday loan, you’ll need to provide proof of income. So you may need to provide bank statements or some government form that shows you receive CCB payments. You will also need to provide a photo id for identification purposes. Depending on your lender, you may also need to provide banks statements and undergo a credit check for approval. 

Loans And Your Canada Child Benefit

Depending on the number of children you have and what age they are, the amount you receive from your Canada Child Benefit could be quite favourable. This, coupled with your yearly income could help you along towards getting approved for the loan that you need. As long as you and your spouse, or you as a single parent can show that you’ll be able to afford the cost of the loan payments, you should be able to find a lender that will suit your financial needs. 


Rating of 5/5 based on 4 votes.

Bryan is a graduate of Dawson College and Concordia University. He has been writing for Loans Canada for five years, covering all things related to personal finance, and aims to pursue the craft of professional writing for many years to come. In his spare time, he maintains a passion for editing, writing screenplays, staying fit, and traveling the world in search of the coolest sights our planet has to offer. Bryan uses the BMO Cash Back Mastercard to earn cash back on everything from boring bill payments to exciting excursions. He is also a strong saver, holding both a TFSA and an RRSP account in order to prepare for his future while taking full advantage of tax benefits.

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