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If you need a little extra cash but don’t want to take out a long-term loan, a 3-month loan might be just what you need. While there may be multiple ways to get a 3-month loan, your choices shrink if you have bad credit. As such, getting a loan from a payday lender may seem appealing, but can you get a 3-month payday loan in Canada?

Let’s go deeper into short-term and payday loans to help answer that question.


Key Points:

  • In Canada, 3-month payday loans are not available.
  • The maximum payday loan term length is 2 months (62 days).
  • Payday loans are not installment loans and must be repaid in one lump sum by the end of the term.
  • An installment loan with a 3-month term may be a viable alternative to a payday loan. 

Can You Get 3-Month Payday Loans In Canada?

Payday loans are short-term loans that are available to Canadians with bad or good credit who need cash quickly to cover an expense. But while 3-month loans may be considered short-term, they are not available as payday loans in Canada, as they typically only come in loan terms of 2 weeks to 62 days.

If you’re looking for a loan that allows you to have up to 3 months to repay the loan amount, you’ll need to seek an alternative to payday loans, which we’ll get into next. 

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.

Alternatives To 3-Month Payday Loans In Canada

The following are some alternatives to 3-month payday loans if you’re looking for short-term financing:

3-Month Installment Loans 

While most installment loans have a term of 6 months to 5 years, 3-month installment loans may be available with certain lenders. However, they may charge higher interest rates than a regular installment loan. 

Unlike payday loans that require the funds to be paid back in one lump sum, personal installment loans allow you to repay the loan amount in installments over the term. In the case of a 3-month loan, you’d make regular payments over the course of 3 months, after which the full loan amount must be repaid, plus interest.  

Learn more: Best Personal Loans In Canada

Credit Cards

Depending on how much money you need and what your credit limit is, you could put the expense on your credit card. If you can come up with the money you borrowed on credit before the next billing period, you can access the money interest-free. Otherwise, you can simply pay the minimum payment until you can pay off the amount. 

However, if you carry that balance over to the next month, you’ll be stuck paying interest on it, which generally ranges from 19.99% to 22.99%. So keep that in mind before borrowing with your credit card.   

Pro Tip. If your credit is in decent shape you can opt for a credit card balance transfer to take advantage of a low or 0% interest offer. These promotional interest rates generally last for 3 to 12 months.
During that time, you can use your credit card and carry a balance for this promotional period without having to pay interest. 

Personal Line Of Credit 

Instead of taking out a traditional loan, you might want to apply for a personal line of credit. These financing programs work somewhat like a credit card, in which you’ll be provided with a specific credit limit to spend up to. Moreover, with this option, you can take 1 month, 3 months, or more to pay off the amount you use.

As long as you make the minimum payments, you can keep your line of credit account open. That way, you can continue tapping into this credit account as the need for cash arises without having to repeatedly apply for a personal loan. Moreover, interest is only charged on the amount you withdraw, rather than the entire credit limit. 

Learn more: Best Line Of Credit Rates In Canada

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Cost Of A 3-Month Loan

Let’s compare how much a 3-month loan for $1,500 could cost you based on different financing types. To make things more comparable, we’ll assume that we’re making the same payments on a personal line of credit and credit card as an installment loan:

Installment LoanPersonal Line of CreditCredit Card
Interest Rate15%29.99%21.99%
Monthly Payment$512.55   $525.20$518.44
Total Cost$1,537.66$1,575.59$1,555.31

Can You Get A Bad Credit 3-Month Loan?

Conventional lenders like banks typically require borrowers to have good credit for personal loans. If your credit scores need improvement, you may find it very difficult to get approved for a 3-month loan with these lenders.

Instead, you may have better luck with an online lender. These alternative lenders place more weight on other factors, such as income, assets, and job stability. 

Do 3-Month Loans Require A Credit Check In Canada?
While some lenders may not require a credit check, others may at least require a soft credit check. These types of checks do not impact your credit. That said, some online lenders may require a hard credit check.

Can You Get A 3-Month Loan With No Instant Bank Verification?

When applying for a 3-month loan, you will usually need to provide bank statements as part of the application process. However, if you don’t have a bank account and are unable to provide these bank statements, you’ll likely be unable to qualify for the loan. In such cases, a no instant bank verification loan can come in handy. 

A no instant bank verification loan allows you to qualify for a loan with no documentation from your bank.

Learn more: No Instant Bank Verification Loans In Canada


What Should You Consider When Getting A 3-Month Loan?

Before applying for a 3-month loan, there are a few important factors to consider:

Interest Rate

The interest rate you’re charged will have a direct impact on the overall cost of your loan. The higher the rate, the more you’ll pay over the loan term. 

Rates for personal loans generally range from 9.99% to 35% (APR). For this reason, you should aim to get the lowest rate possible, which is why it’s helpful to have a good credit score when applying for a loan.

To help you understand how your rate can impact your monthly payments and total loan cost, let’s compare using a few examples of different rates on a $1,500 loan (assuming a 3-month term):

9.99%14.99%19.99%
Monthly Payment$508.35$512.54$516.75
Total Interest$25.04$37.63$37.63
Total Loan Cost$1,525.04$1,537.63$1,550.25

In this example, a rate of 19.99% would mean $8.40 more per month and $25.21 more overall.

Lender Fees

Further, lenders charge fees on loans, such as administrative and origination fees, so you’ll want to know what these fees are before you apply.

Payment Flexibility

Loans come in a variety of term lengths and payment schedules. Your goal is to work out an arrangement with your lender whereby the loan term and payment schedule matches your needs. As such, some flexibility is an important consideration when comparing loans and lenders. 

Funding Speed

If you’re in need of quick cash, the underwriting process is important to know. Find out how long it will take to get approved for the loan, and when you can expect to have the funds deposited into your account. Generally speaking, traditional lenders usually take at least a week or longer to process loans, while online loans can be approved and funded within 24 hours


What’s The Difference Between A Payday Loan And An Installment Loan?

It’s helpful to understand the difference between payday loans and installment loans before deciding which loan option to apply for. Key differences include the following: 

Loan Term 

Payday loans are paid back in one lump sum, with no smaller installments involved. Soon after you borrow the money, you’ll need to pay it all back — plus interest — in one repayment. This can make payday loans more difficult to repay.

Installment loans, on the other hand, allow borrowers to repay the loan by making smaller payments spread out over a set term. This makes installment loans easier to repay compared to payday loans.

Loan Amount

Payday loan amounts are typically capped at $1,500, making them useful for smaller financial needs. Installment loans offer higher loan amounts, depending on your qualifications and the lender. With an installment loan, you may qualify for up to $35,000 or more, making these loan types more suitable for larger financial needs. 

Interest Rate

Payday loans are very expensive financing products, with APRs as high as 365%. Installment loans are much cheaper in comparison, with APRs ranging from 5% to 30%. Installment loans may come with lower rates, depending on the lender and your financial and credit profile.

Learn more: Get A Small Installment Loan Instead Of A Payday Loan


Final Thoughts

A 3-month loan could be just what you need if you require an extra lump sum of cash but don’t want to finance for a long period of time. However, 3-month loans are not available as payday loans here in Canada. As such, you’ll need to apply for a short-term personal loan or a line of credit with your bank, credit union, or online lender.


3-Month Payday Loan FAQs

What’s the maximum term for payday loans?

In general, the longest term for a payday loan is 62 days, and the shortest is 1 week.
 

Can I get multiple payday loans?

Most provinces have laws against more than one payday loan taken out at the same time. You’ll need to pay off your payday loan in full before applying for another one.

Will a payday loan affect my credit? 

While conventional personal loans usually require a credit check, payday loans do not. As such, payday lenders don’t report these loans to the credit bureaus. That said, payday lenders might sell your debt to a collection agency if you miss your payments, which could have a negative effect on your credit scores. 

Can I get a no refusal 3-month loan?

If you have bad credit, a short-term no-refusal loan may sound like a good option. With this type of loan, you won’t be denied a loan simply because of bad credit, though you’ll still need to meet income requirements. 

Can I get instantly approved for a 3-month loan? 

Yes, there are many lenders who offer instant approvals. You may even be funded within the same day with certain lenders when you apply by a certain time. However, you must still meet income requirements to get approved.

Can I get a 1-month payday loan in Canada?

Yes, 1-month payday loans are available in Canada. Since payday loan term lengths can be made for up to 62 days, a 1-month term would be available.
 

Can I get a same day e-Transfer payday loan in Canada?

Yes, several online lenders in Canada provide same day e-transfer payday loans. These loans are suitable to those who are in need of immediate cash to cover an urgent expense. The approval process is often automated, and funds can be deposited directly into your bank account soon after. 

Can I get a payday loan on government benefits in Canada?

Yes, many payday lenders in Canada offer payday loans to individuals collecting government benefits, such as Employment Insurance (EI), Canada Pension Plan (CPP), and Social Assistance. In this case, the lender would use your benefits as a source of income when assessing your loan application. As long as your monthly income meets the lender’s minimum income requirements, you may be able to use government benefit earnings as a source of income to apply for a payday loan.

Can I get a weekend payday loan in Canada?

Yes, weekend payday loans are available in Canada from certain payday lenders, particularly those that offer online loans. Funds are available either through cash when applying in person or via e-Transfer online.

What is the easiest loan to get approved for in Canada?

Payday loans tend to be the easiest loan types to qualify for. This is because there are typically no credit score requirements to meet, and income levels can be lower given the maximum $1,500 loan amounts available with payday loans.

What is the minimum amount for a payday loan?

The minimum amount for a payday loan in Canada is typically $100, though it may be lower depending on the lender.
Lisa Rennie avatar on Loans Canada
Lisa Rennie

Lisa has been working as a personal finance writer for more than a decade, creating unique content that helps to educate Canadian consumers in the realms of real estate, mortgages, investing and financial health. For years, she held her real estate license in Toronto, Ontario before giving it up to pursue writing within this realm and related niches. Lisa is very serious about smart money management and helping others do the same.

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