Can You Get A No Credit Check Loan In Canada?

Can You Get A No Credit Check Loan In Canada?

Written by Bryan Daly
Fact-checked by Caitlin Wood
Last Updated January 23, 2023

You’ve checked your free credit score so you know where you stand. You might have bad credit. But can you trust a loan offer that claims not to require a credit check?

Sure, it can be hard to qualify for a loan if you have bad credit, need fast cash, and don’t have time to improve your creditworthiness. That’s why some lenders offer loans with no credit check involved. Keep reading to learn whether no credit check loans are actually a legitimate option in Canada.

What Is A No Credit Check Loan?

A no credit check loan is a sum of money that you borrow from a lender and repay over time. The lender doesn’t check your credit before approval as a bank or credit union would. Here are some common examples of no credit check loans:

  • Payday Loans – Small loans ($100 – $1,500) with short repayment terms (14-days), easy approval requirements and extremely high rates.   
  • Auto Title Loans – Lenders may accept your car’s title as collateral. No credit check but you could lose your vehicle if you default on the loan.
  • Guarantor Loans – Someone can co-sign your loan and take over your payments if you can’t afford them. Watch out, this can be risky for their finances.    
  • Secured Personal Loans – Some personal loans also require collateral. Be careful here too, as the lender may seize your asset if you miss too many payments.

Are No Credit Check Loans Legitimate?

You should always be on the lookout for predatory lenders and those looking to take advantage of you, especially when it comes to lenders who don’t check your credit. But to answer the question, yes no credit check loans can be legitimate. That said, you will be taking on some risk when you choose a no credit check loan, such as:

  • High-Interest Rates – Some no credit check loans come with really high-interest rates. The lender may say it’s because they’re taking a chance by approving a client with bad credit but take this with a grain of salt. Payday loans are one of the most common examples of loan products that have predatory rates. 
  • Short Terms – No credit check loans often come with more restrictive payment periods. If you can’t afford your full loan balance or payment by its due date, you’ll be charged a stiff penalty and extra interest. Once again, payday loans are comparable here because of their 2-week terms.
  • High/Hidden Fees – Some lenders charge for anything and everything. This is especially true with no credit check loans, where it’s easy to overlook the fine print when you need the cash fast. Fees for loan insurance, origination, and NSF or late penalties can be disguised by technical jargon or hidden from you entirely.  
  • Collateral – Bad credit can make you more likely to miss payments, so some lenders ask for an asset as collateral. While secured loans can be larger and have better rates, the lender legally owns your asset until your debt is repaid and has the right to seize it if you default. 

Watch Out For No Credit Check Loan Ads

Unfortunately, with buzzwords like “no credit check or documentation”, “easy approval” and “fast cash”, it’s not always hard for a no credit check lender to reel you in. 

Be wary of a loan advertisement that uses these buzzwords. Although the easier approval process can be appealing when you have bad credit, it means the lender doesn’t really care if you pay your loan back. They might actually make more from a defaulted account because it can force you into a cycle of debt

Alternatives To No Credit Check Loans

When you have terrible credit, you might think there are no options. Don’t worry, there are alternatives that can cause less financial harm, including but not limited to:

  • Credit Counselling – There are non-profit credit counselling agencies out there. A good counsellor can give you financial lessons, direct you toward debt management solutions and negotiate with your creditors.
  • Bad Credit Personal Loans – There are also many subprime lenders that can offer you a personal loan with a better rate and longer-term. While your credit may be checked, you probably won’t have to risk assets. 
  • Building Credit – If you don’t need fast cash, it’s safer to improve your credit score until you’re eligible for a better loan. Try paying your other debts, not using too much credit and looking for mistakes or fraud on your credit report.   

No Credit Check Loans FAQs

Can I get a loan without a job?

While it may be difficult and more expensive, there are ways to get a loan without a job. Some alternative and payday lenders will accept non-traditional forms of income including, social assistance, EI, disability assistance, OAS, pension payments and more.

What kind of documents do I need to apply for a no credit check loan?

When you apply for a no credit check loan, you’ll still need to provide some personal information for identification purposes and some financial information to assess creditworthiness. Generally, lenders will require proof of income, proof of employment, bank statements and some form of personal identification.

Do Payday lenders require a credit check?

No, most payday lenders do not require a credit check. They usually base their approval on your overall financial health. This includes your income, debt-to-income ratio, job stability and other factors that may affect your financial health.

Considering A No Credit Check Loan?

No credit check loans come with risks that can make their easier requirements irrelevant. Taking on more debt may only lead to financial disaster, including worse credit. Before you apply, make sure to speak with a financial advisor, research your alternatives and factor the potential debt into your budget.  

Rating of 5/5 based on 2 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 travelling the world in search of the coolest sights our planet has to offer.

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