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Whether you’ve lost your job due to cutbacks or COVID-19, left for personal reasons, or you’re just waiting for your next career path to come along, being unemployed can definitely put you in a tough financial situation. When that happens, you may start asking yourself; can I get a loan if I’m unemployed?
Yes, you can. In fact, there are plenty of lenders in Canada that now offer short-term unemployment loans to jobless credit users struggling with debt. That’s right, if your application is approved, a lump sum of cash will be deposited into your bank account, which you can use for almost any expense that comes your way.
Obviously, one of the best things about unemployment loans is that you don’t need a job to qualify for financing, which other credit products may require you to have. That said, there are a few personal and financial criteria that you’ll need to be eligible, such as:
There are a few types of loans you can get while on government benefits including employment insurance, CCB benefits, social assistance, and disability assistance income.
Payday loans for the unemployed on benefits can be found in many parts of Canada. In fact, you could find a payday loan while on unemployed benefits in Ontario, Alberta, BC or any other province for that matter. However, getting a payday loan while on unemployment benefits in Quebec can prove difficult due to their lending laws. In Quebec, payday lenders can only charge an apr of 35%, which is why many payday lenders do not operate in Quebec.
Regardless, payday loans are one of the easiest loans to qualify for while unemployed. The reason being, many accept non-traditional sources of income including employment insurance (EI), CCB, social assistance, CPP and disability assistance. Moreover, it generally does not require credit checks. This makes payday loans a good option for those who are looking for quick cash and have poor credit. However, it’s important to remember that there are numerous risks associated with payday loans including high interest rates, short-terms and the possibility of getting trapped into a payday loan cycle.
The maximum a lender can charge you per $100 borrowed varies by province. Here is the maximum your lender can charge you:
There are lenders in Canada who offer installment loans to those who are unemployed whether due to a disability, an injury, pregnancy or simply because their work had to let them go. Generally, these installment loans will have higher rates and lower term lengths and amounts due to the added risk they take by lending to someone who is considered risky. Installment loans are typically a better choice than payday loans as they have longer terms and lower rates, making them more affordable.
Vehicle title loans are another form of credit that may not require employment verification. So long as you have a source of income, you should be able to qualify for an auto title loan. The requirements are a lot more flexible with an auto title loan due to the security it provides. If you miss a payment, the lender can use your vehicle as collateral.
Another loan you can get without employment verification is a line of credit. Lines of credit are great for unexpected expenses, as you’ll have a reserve of cash you can use whenever you need. You only need to pay interest on the amount you use and like a credit card, you regain access to the funds as you repay the amount you use.
Learn more about the loan options in Canada.
Amount | APR | Term (Months) | Types of Loan | Funding Time | ||
![]() | Up to $10,000 | 43% | 36 – 60 | Guarantor loan | With 24 hours | More Info |
![]() | Up to $20,000 | 19.99% – 46.8% | 6 – 60 | Personal loan | Same day | More Info |
![]() | Up to $15,000 | 19.99% | Open-end | Line of credit | Same day | More Info |
![]() | Up to $1,500 | 15% – 23% | – | Payday loan | Within 24 hours | More Info |
![]() | $500 – $750 | 28% – 34.4% | 3 | Short-term loan | Same day | More Info |
![]() | $100 – 10,000 | – | 6 – 60 | Line of credit | Within 24 hours | More Info |
![]() | $1,000 – $15,000 | 46.93% | 12 – 60 | Personal loan | Within 24 hours | More Info |
Essentially, getting approved for the best unemployment loan in 2022 is all about your creditworthiness. While it can be embarrassing to declare your lack of employment, your lender simply wants to know you’ll be able to pay off your debt without issue. As long as you’re a permanent Canadian resident with decent credit, are past the age of majority in your province or territory, and have an income large enough to cover your payments, then you shouldn’t have too much problem qualifying for an unemployment loan.
In addition, there are a few things you can do to increase your chances of approval for a favourable loan amount, interest rate, and repayment plan, including but not restricted to:
Remember, there are plenty of lenders across Canada that can offer you an unemployment loan. However, you might have to look outside of banks and credit unions, where requirements can be tougher, meaning you usually need a job to qualify.
Instead, you may need to apply with an alternative lending company, such as a private lender, no-credit-check lender, or payday lender. These institutions are usually much more lenient with their restrictions, as long as you can afford your loan payments. They can also have faster approval times and more adjustable repayment plans.
All this said it’s extremely important to do research and compare a few different lenders in your area before giving away any personal or financial information. After all, one of the main risks associated with unemployment loans is the higher interest rates and administrative fees that may be involved.
Unfortunately, research is also key because alternative lenders are harder for the government to regulate, leading to a larger probability of scamming, fraud, and illegal rates. These predators are either looking to sell you a terrible loan for an unreasonable cost or, even worse, to steal your identity, money, and financial information.
For example, a payday loan is a small lump sum ($100 – $1,500) that gets deposited directly into your bank account. These loans are tempting because there are very few requirements and approval times are only one or two days. Plus, some payday lenders will approve you without a job, provided you have some sort of monthly income.
Nonetheless, payday loans are risky because they have very high-interest rates (300% – 500% APR) and short repayment terms of 14 days. While they can be a viable option during an emergency, there are also many fees and possible penalties. All of this can make a payday loan far more expensive than a traditional unemployment loan.
Prior to applying, be sure your lender has legitimate credentials, a long history of satisfied customers and a good rating from the Better Business Bureau.
Obviously, it can be difficult to cover your daily expenses when you don’t have a job or you’re self-employed with an inconsistent income. It can also be tough when you’re retired or something is preventing you from working, such as a criminal record, a medical issue, or an unexpected event like the COVID-19 pandemic.
Overall, an employment loan can be a more affordable way of dealing with those issues because you can pay off all your most important expenses at once, leaving you with a single (often adjustable) repayment plan to follow.
Because the loan is liquid cash in your bank account, you can use it for almost any expense. That said since you could be in debt for some time, it’s best if you only use your unemployment loan to cover your essential costs, such as:
Don’t forget, there are a few risks that you must consider before you apply for an unemployment loan in Canada. Although you shouldn’t have trouble finding a loan that suits your preferences, these dangers can definitely affect your credit and finances.
Here are a few warning signs to look out for with unemployment loans in 2022:
No matter the reason for your unemployment, there are sure to be some lenders in your area that can offer you a loan with favourable conditions. If you’d like to be connected with those financing sources, there’s no better referral network than Loans Canada.
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