Navigating financial challenges while receiving disability assistance can be tough, especially when you struggle to find approval for a loan.
For Canadians relying on disability benefits, disability loans and alternative lending options are a viable lifeline, designed to offer financial support that is tailored to those with non-traditional income sources.
Whether you’re considering a personal loan, payday loan or even an alternative like KOHO’s Cover cash-advance service, there are plenty of pros and cons to keep in mind.
We’ll dive into those details and more, including what you’ll need to be eligible for most disability loans in Canada today.
What Is A Disability Loan?
A disability loan refers to any loan product that could be approved for Canadians receiving disability income and benefits. These loans can help cover unexpected expenses, medical bills, or simply fill a short-term financial gap until your next pay date.
Traditional lenders typically have a strict set of requirements needed in order to approve a loan application. However, increasingly there are alternative lenders across Canada who will accept non-traditional forms of income for personal loans.
Lenders offering disability loans typically recognize various government or private disability benefits as a valid source of income, making them accessible even to those who don’t qualify for traditional loans.
Disability loans can provide quick access to cash, and even though your options may be limited to just a handful of lenders, it’s still important to review the terms carefully and compare your options.
Types Of Loans You Can Get On Disability Assistance
If you’re reliant on disability assistance as a primary source of income, generally speaking, you will have access to two different kinds of loan products, depending on your financial needs and eligibility. Here’s a breakdown of the main options:
Personal Loans
This is a standard loan product, which can be used for various purposes, such as covering unexpected expenses, consolidating debt, or simply funding a big purchase. While not in the majority, there are Canadian lenders out there who will accept disability benefits as an income source, provided you can show that it is a reliable source of income that is directly deposited into your bank account.
- Features. Personal loans that accept disability benefits as a form of income usually come with fixed interest rates, typically between 15% and 47%. Repayment terms range from a few months to several years, depending on the lender.
- Pros. Lower interest rates compared to payday loans and flexible repayment terms.
- Cons. Approval may depend on your credit score and financial history.
Keep in mind that you’re more likely to find online lenders who will accept disability benefits, rather than traditional lenders like a bank. And even if you feel like your options are limited, spend some time comparing rates and terms before committing to a particular lender.
Learn More: Personal Loans
Payday Loans
Payday loans are short-term loans designed to provide quick cash for emergencies. There are many online payday loans that accept disability in Canada. Many payday lenders will accept disability assistance as income, as long as you have a regular payment schedule and can provide proof of benefits.
- Features.In most cases, payday loans are available at smaller amounts, often up to $1,500, with repayment due usually within 30 days or less.
- Pros. Fast approval process, minimal requirements, no credit checks and same-day funding via eTransfer.
- Cons. Extremely high interest rates and fees, and short repayment terms that pose a risk of falling into a cycle of debt.
While payday loans are convenient, they should be used only as a last resort, due to the extremely high interest rates these loans carry.
More on: How To Get Payday Loans With Government Benefits Canada
Where Can You Get A Loan On Disability Benefits?
| Loan Amount | Interest Rate | Term | Provinces Available | ||
Loans Canada | Up to $50,000 | Prime to 46.96% | 3 – 60 months | Across Canada | Learn More |
Cash Money | Up to $1,500 | Varies by province* | Up to 62 days | BC, AB, ON | Learn More |
iCash | Up to $1,500 | Varies by province* | Max 62 days | BC, AB, MB, ON, NB, NS, PEI | Learn More |
GoDay | Up to $1,500 | Varies by province* | Max 62 days | BC, AB, SK, MB, ON, NB, NS, PEI | Learn More |
Do Lenders Offer e-Transfer Loans On Disability Assistance?
Yes, a lot of online and payday loan lenders that accept disability assistance as income can provide loans via e-transfer. This method is often offered by lenders who specialize in small, short-term loans like payday loans or cash advances.
What Type Of Disability Assistance Is Accepted As Income By Lenders?
The type of disability assistance that is accepted as income will vary from one lender to another.
While some lenders are more flexible and willing to work with various forms of government assistance, most traditional lenders, including banks and credit unions, won’t offer that same flexibility.
Here are some examples of the different disability assistance programs that alternative Canadian lenders may recognize as valid income sources:
| Ontario Disability Support Program (ODSP) | ODSP provides financial assistance and essential benefits to eligible residents of Ontario with disabilities. | Learn more |
| Assured Income for the Severely Handicapped (AISH) | In Alberta, AISH offers financial support to individuals with severe, permanent disabilities. | Learn more |
| BC Disability Assistance | British Columbia provides financial support to residents with disabilities through this program. | Learn more |
| Saskatchewan Assured Income for Disability (SAID) | This program provides financial assistance to SK residents with disabilities. | Learn more |
In addition to these programs, some lenders may also accept payments from federal programs like the Canada Pension Plan for Disability (CPP-D), or even private disability insurance payouts.
Learn more: How To Get Approved For A Personal Loan On ODSP
What Do You Need To Get A Disability Loan?
To qualify for a disability loan, in most cases you’ll typically need:
- An Active Bank Account. Most lenders will require you to provide details of an account where your disability benefits are deposited to verify your income and facilitate loan repayment.
- Proof of Income. For some lenders, this will fall under providing your bank account, but you may be asked to provide further proof like a recent disability benefit statement or some other documentation that demonstrates regular income sources.
- Credit Score. Some lenders may check your credit score, although many lenders who accept disability benefits don’t check credit scores.
- Government-Issued ID. Every legitimate lender will ask you to verify your identity with one to two forms of valid ID, such as a driver’s license, passport, or other government ID.
- Age of Majority. You must be at least 18 or the age of majority in your province or territory.
- Proof of Residency. Some lenders might require documents like a utility bill to confirm that you live in Canada.
Pros And Cons Of Loans On Disability
To help you make an informed decision, let’s take a look at the overall pros and cons of personal loans on disability in general
Pros
- Quick Access to Cash. You can get the money you need quickly, sometimes via e-Transfer, to handle urgent expenses.
- Flexible Income Sources. There are lenders out there who will accept disability benefits as income, giving you access to personal or payday loans.
- Build Credit. Timely repayments could help improve your credit score with certain loans.
- Bad Credit is OK. There’s usually some crossover among lenders who accept non-traditional income sources and those who work with lower credit scores.
Cons
- Higher Cost. While there are lenders who will accept forms of income such as disability benefits, these loans almost always come with high interest rates and fees.
- Shorter Repayment Terms. Payday loans and some disability loans often require quick repayment, which might make it hard for some to commit to.
- Higher Risk. Because these loans can often come with higher fees, rates and shorter terms, borrowing in this way often carries a higher risk of falling into a debt-cycle.
- Limited Loan Amounts. Another drawback with these loans is that loan funding is usually on the smaller side, so you may struggle if you need funding for larger, more significant expenses.
Alternative Options For Extra Cash
If you’re looking for a small amount of quick cash, there are a few alternatives worth considering.
Bree
This service offers interest-free cash advances for small amounts (up to $350), to help you cover unexpected expenses without the high costs of traditional loans.
KOHO Cover
With a KOHO account, you can access up to $250 interest-free through their Cover feature, making it a great option for covering short-term financial gaps.
Credit Card Cash Advance
This is another, more traditional way to access cash in a pinch, but it will come with very high fees and interest rates, so it’s best only when you can repay the loan quickly.
These options can be helpful in a pinch, but always consider the costs and repayment terms before you decide to take on any loan or cash advance product.
Bottom Line
Disability loans can provide vital financial relief for Canadians receiving disability benefits, offering loan options for short-term emergencies or longer-term financial needs.
While these loans from alternative lenders can open important financial doors, it’s crucial to still ensure you carefully compare lenders, rates, and terms. You might also want to consider alternative solutions like Bree or KOHO Cover for short-term cash advances instead of a personal loan or payday loan.
