Can I Use My Canada Pension Plan To Get A Loan?

Can I Use My Canada Pension Plan To Get A Loan?

Written by Bryan Daly
Fact-checked by Caitlin Wood
Last Updated October 13, 2022

When the age of retirement is reached or is approaching fast, the prospect of working less or stopping work altogether can make a lot of potential retirees wonder whether they will need a loan to help cover the cost of their mortgage, car, or even just their general, day-to-day expenses.

If you’re retired and living off your Canada Pension Plan (CPP), find out if you can qualify for a loan on CPP.  

Can I Use My Canada Pension Plan To Get A Loan?

Many lenders will accept your Canada Pension Plan benefits as a source of income when you apply for a loan. However, those lenders generally won’t be banks or credit unions, since financial institutions tend to have tougher requirements. 

Lenders that accept non-traditional forms of income include private loan providers and payday lenders. As long as your CPP payments are large enough to cover your loan balance, plus interest or fees, you should have a good chance at qualifying for a CPP loan. 

Where Can You Get A Loan Using Your CPP?

Loan AmountInterest RateTermProvinces Available
Loans Canada LogoUp to $35,0002.99% to 46.96%4 - 60 monthsAcross CanadaLearn More
Cash MoneyUp to $1,500Varies by province*Up to 62 daysBC, AB, ONLearn More
iCashUp to $1,500Varies by province*Max 62 daysBC, AB, MB, ON, NB, NS, PEILearn More
Magical CreditUp to $20,00019.99% - 46.8%12 - 60 monthsBC, AB, ON, NB, NS, PEI, NLLearn More
Go DayUp to $1,500Varies by province*Max 62 daysBC, AB, SK, MB, ON, NB, NS, PEILearn More
Spring-FinancialUp to $35,0009.99% - 46.96%6 - 60 monthsBC, AB, SK, MB, ON, NB, NS, PEI, NLLearn More
*The maximum borrowing cost for a payday loan varies by province, learn more here.

Types Of Loans You Can Get Using Your CPP

Before you apply for a loan using your CPP, it’s important to know that some alternative lenders offer smaller loans with high-interest rates. If you’re comfortable with those conditions, you might be able to qualify with either of these credit sources:

Personal Loans

It may be possible to get a personal loan using CPP but it depends on the lender. For instance, most banks won’t accept CPP retirement or CPP disability payments as income, since they’re not necessarily large or steady enough to pay back your loan. However, there are some alternative personal loan lenders that will offer CPP loans. Just remember, these lenders will charge higher rates. 

Payday Loans

A payday loan is a $100 – $1,500 loan with a short term and easy requirements. Borrowers can apply with payday lenders that accept alternative forms of income, like CPP benefits. You can get a CPP payday loan by direct deposit within 1 or 2 hours of approval depending on the lender. 

How To Apply For A CPP Loan?

Applying for a CPP loan isn’t too complicated. Just complete these steps:

  1. Find a lender that accepts CPP benefits and figure out their requirements
  2. Visit their website and go to their loan application page
  3. Fill out your personal and financial details
  4. Enter your CPP amount and frequency of payments 
  5. Provide your bank account details (direct deposit is generally required)
  6. Agree to electronic transfers, as well as your lender’s terms and conditions 

What Are The Requirements For A CPP Loan? 

Every lender has different standards for their clients, but in most cases, you must pass the following requirements to apply for a loan using your Canada Pension Plan:

  • Contact Information – You must provide your full name, phone number, Social Insurance Number (SIN), home address and email. When you apply, some lenders will ask for a recent utility bill or another document with those details on it.
  • Age & Residency – You’ll also need a piece of government ID (driver’s license, passport, etc.) to prove your age and residency. Only permanent residents and citizens who are past their provincial age majority (18 or 19+) can qualify. 
  • Income & Bank Account – Since your source of income is through your Canada Pension Plan, you’ll need to prove you receive these benefits (CPP retirement pension or CPP disability benefit). This can be proven by providing bank statements where you receive your benefits.

How To Increase Your Chances Of Securing A Loan On CPP?

Depending on your chosen lender and their qualification standards, there are a few different steps you can take that will help you secure a CPP loan. 

Improve Your Credit Score

While not all lenders will use your credit score as a factor during their qualification process, it’s always a good idea to improve it whenever possible. A high credit score will increase your chances of getting approved because it will show the lender you’re financially responsible.

Lower Your Debt-to-Income Ratio

Reducing your debt-to-income ratio by paying off existing debts is a good way to increase your odds of approval. The more income you have available after paying your current debts and bills, the more likely you’ll be able to qualify for a loan on CPP. The lender will want to ensure you have enough income left over to pay your CPP loan after paying your other financial obligations.

Get A Trusted Friend Or Family Member To Co-Sign 

If your financial stability is not enough to win the approval of your lender, having someone with good credit and finances co-sign your loan can help with your odds of approval. A cosigner is someone who agrees to take over the loan in the event you are unable to. This greatly reduces the lenders’ risk, which can result in higher chances of approval, larger loans and lower interest rates. 

Choose Your Lender Carefully

Choosing a lender whose minimum requirements you meet will also improve your odds of approval for a CPP loan. One of the main factors you should consider is whether the lender accepts CPP as a source of income.

When applying for a loan on CPP, be sure to do your due diligence. There are many scam artists in town who pose as lenders, so make sure you learn about loan insurance scams during the process. What many of these scam artists will do is try to sell you “advance loan insurance,” claiming it’s a necessary expense for the risk that they’re taking by lending to you. On the other hand, some may try to use your financial and personal information to steal your identity. Before applying, it’s very important to verify your lender’s credibility.

What Is The Canada Pension Plan?

The CPP is a benefit plan provided by the government for retirees. It provides Canadians of retirement age (at least 60 years old) to receive a monthly, taxable benefit. The amount you receive under this benefit depends on a few factors, including: 

  • When you start your pension
  • How long you contributed to the CPP
  • How much you contributed to the CPP
  • Your average earnings 

How Are The CPP Contributions Made?

With the exception of Quebec, where the Quebec Pension Plan applies, anyone who is 18 or over, works in Canada and earns over $3,500 a year will need to contribute to the nationally administered Canada Pension Plan.

If the contributor has an employer, half of all necessary contributions will be taken out of their paychecks, while their employer pays the other half. However, if the contributor is self-employed, they will be responsible for paying the full amount of the required contributions themselves. 

Who Can Get A Loan Using Canadian Pension Plan Benefits?

To get a loan using Canadian Pension Plan benefits, you need to apply for and receive your CPP payments. Retirees can apply for the CPP one month following their 60th birthday. Your CPP payment amount depends on how long you contributed to the CPP and how old you are when you apply to receive your payments. To increase their payment amounts, many retirees wait until they are 65 to start collecting.  

There are many alternative lenders who see CPP payments as income, this is what they will use to qualify you for a loan.

Loans On CPP FAQs

Can you get CPP payday loans with no credit check?

Some legitimate lenders won’t check your credit if you can provide bank statements that show the size and reliability of your income. However, make sure to do research and be careful around lenders that offer “no credit check” loans. Scam artists often create fake lending websites to take advantage of people who are desperate for cash. 
Unfortunately, while you can use the income from your CPP to qualify for a loan, you aren’t actually allowed to borrow money from this pension once you’ve contributed it.   @answe

Can I use my CPP benefits to get a loan?

Yes, many alternative lenders will gladly treat your CPP payments as your primary income when you apply for a loan, as long as it’s sufficient.    

Can a person on pension get a loan?

Yes, some lenders will accept multiple types of pension benefits as income, including Old Age Security (OAS), private pensions and investment income. Basically, if you meet the lender’s minimum requirements, you can get approved for a loan using your CPP.

Want To Apply For A Loan Using Your Canada Pension Plan? 

Although CPP loans can be extremely helpful when you need access to fast cash, they involve certain risks that you must take into consideration. This is especially true if you’re considering a payday loan. Always consider all your options, understand the total cost of a loan, and choose a lender that you trust.

Rating of 5/5 based on 7 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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