How to Get Approved for a Personal Loan on ODSP

How to Get Approved for a Personal Loan on ODSP

Written by Caitlin Wood
Last Updated October 7, 2021

According to a report by the Ministry of Children, Community and Social Services, approximately 510,000 individuals in Ontario were receiving ODSP in the year 2018 – 2019. Moreover, another report written in unison by The Dream Team, House Link and The CAMH, found that 89% of those on ODSP were unemployed. Meaning most ODSP recipients were living on a fairly meagre income. Given that approximately half a million Ontarians require ODSP, it is likely that some individuals may run into unexpected expenses, particularly ones surrounding their disability. These expenses can be more than what they can afford on ODSP. As such, many may look towards loans, but can you get a loan while on ODSP?

What Is The Ontario Disability Support Program (ODSP)? 

The Ontario Disability Support Program offers both financial and employment support for adults with disabilities living in the province, who require the assistance and who meet the qualifications. Individuals under the program can access up to $1,169 to $1,887 depending on a number of variables including shelter type, number of dependents, and if you have a spouse. While the program does provide support for countless Ontarians, in certain situations, it is difficult for some recipients to make enough money each month to afford basic life necessities, let alone cover the cost of an unexpected expense.

Can You Get A Loan While On ODSP? 

It is possible to apply for and get approved for a personal loan when your income is coming from ODSP. But, it’s also important to keep in mind that all lenders are different and that it may take more time or require a bit more work on your end.

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Good Reasons To Take Out A Loan While On ODSP

The amount of money an individual receives each month while on ODSP depends on many different factors, including but not limited to how much they pay for shelter each month, the number of family members, and the age of their family members. This can often leave some ODSP recipients needing extra financial help to cover the cost of “extra” or unexpected expenses. Here are a few good reasons to take out a loan while on ODSP.

  • To Finance a Vehicle – When you live in Ontario, the chances of needing some type of vehicle to get around are very high. Almost all Canadians, regardless of their income status, need a loan in order to afford a vehicle, being on ODSP is no exception.
  • To Handle A Medical Emergency – Dealing with any medical expense, emergency or not, can be very expensive. Getting approved for the loan you need is often the difference between getting the help you need and going without.
  • To Cover an Unexpected Expense – Life happens and more often than not it’s very expensive. Getting an affordable loan to help cover those costs is often the only option for many consumers.
  • For a Large Purchase – A loan is one of the best financing options for those items that you can’t afford to pay for this cash.
  • To Pay for Repairs – Often repairs pop up out of nowhere. Whether they’re for your house or your vehicle, if you need to get something fixed as soon as possible, an affordable installment loan is a great option.

Types Of Loans You Can Get While On ODSP

You can get both a payday loan and a personal loan while on ODSP. However, you’ll need to find a payday lender or a personal loan lender who accepts non-traditional forms of income. Non-traditional forms of income include EI, ODSP, CPP, CCB, OAS and other incomes that come from government benefits and assistance programs.

Personal Loans For ODSP

To qualify for a personal loan while on ODSP, you’ll need to find a personal loan lender in Ontario who accepts Ontario disability benefits as a source of income. ODSP personal loans typically offer higher loan amounts and terms than payday lenders. They also charge lower rates, but in comparison to other personal loan lenders, their loan terms tend to be more costly.  

ODSP Personal Loan Pros and Cons

Pros

  • Higher Loan Amounts – Depending on the lender you choose, you could qualify for an ODSP personal loan of $10,000. However, the amount you get approved for depends on what the lender offers and how good your financial situation is. 
  • Lower Interest Rates – Lenders legally cannot charge more than 60%. 
  • Longer Terms – Lenders typically offer terms that can be as short as 6 months and as long as 5 years.  

Cons

  • Requires Credit Checks – Generally when you apply for a ODSP personal loan, you’ll need to meet the lender’s minimum credit score requirement. 
  • Fees – Many personal loans lenders will charge fees such as loan origination fees, administrative fees and fees for late or extra payments. 

Payday Loans For ODSP

There are hundreds if not thousands of Payday lenders in Canada who offer short term loans up to $1,500 to those on ODSP. In order to qualify for an ODSP payday loan, you’ll need to find a lender who will accept your Ontario disability benefits as a source of income. 

ODSP Payday Loan Pros and Cons

Pros

  • Fast Funding – If you’re in need of cash quickly, you can get a payday loan while on ODSP within a few hours to a day. 
  • E-tranfsers – Some ODSP payday lenders will fund you the money via interac e-transfer for faster funding. 
  • Accepts Any Credit – If you have bad credit, you can still qualify for a ODSP payday loan. Some lenders don’t require credit checks, you only have to show proof of income. 

Cons

  • Short Terms – One of the main caveats to payday loans are it’s extremely short terms. You have to pay back the money you borrow plus interest within 30 days or less, depending on when you get paid.  
  • Small Loan Amount – Unfortunately with ODSP payday loans, you can only qualify for a maximum of $1,000 to $1,500 depending on the lender. Moreover, lenders will not lend more than 50% of your income after taxes. 
  • Costly – Payday loans have notoriously high interest rates, APRs easily range between 300% to 600%. When borrowing from a payday lender, it’s important to make sure you can actually afford it or else risk getting caught in a payday loan cycle. 
ON, AB, BC, and NB$15 per $100 borrowed
MB and SK$17 per $100 borrowed
NL$21 per $100 borrowed
PEI$25 per $100 borrowed
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.

What Are The Requirements To Qualify For An ODSP Loan

Approving a consumer for a loan is all about assessing risk and verifying whether the potential borrower can, in fact, afford to make loan payments on top of all their other financial requirements. If you truly cannot afford to take on a loan, the fact that your income comes from ODSP, won’t be the reason you get rejected.

People with high-paying 9-5 jobs get rejected for loans all the time for a wide variety of reasons. All lenders are different and have their own set of requirements when it comes to approving anyone for a loan. Here are some things a lenders will evaluate when approving you for a loan:

Loan Requirements For ODSP 

When applying for a ODSP personal loan or a ODSP payday loan, you’ll need to provide certain personal and financial information, including: 

  • Personal Information: You’ll need to provide your name, address, date of birth, and contact information. 
  • Financial Information: You’ll need to provide information about your income, debt, and credit. 

Documents Required For An ODSP Loan

  • Government Issued ID – In order to prove your identity and address, your lender will likely ask you for a photo identification.
  • Proof of Income – Income is the key factor in determining your eligibility for the loan. Lenders need to verify how much income you have and if it is consistent.
  • Bank statements – Lenders typically require your bank statements to assess your level of debt. If half your income is going to other debts and the other half to rent, they may not want to rent to you as you’d likely be unable to repay it.  

How To Apply For A Loan While On ODSP

4 Steps On Applying For A ODSP Loan

Review Your Finances

Before applying for an ODSP loan, you should review your finances and credit score to see how creditworthy you are. If your debts are really high and your credit score is low, it may be worthwhile to improve your credit and lower your debts prior to applying.

Research Lenders And Get A Quote

Comparing lenders before applying is one of the best strategic moves you can use to get the best rate for you. Many lenders offer free loan quotes, which you can use to compare different loan offers. This can potentially save you hundreds of dollars in interest.

Gather Your Documents

Many borrowers get rejected for an ODSP loan due to missing documentation and unfortunate mistakes on their loan application. To avoid such mishaps, it’s best to gather all the documents you may need to provide, ahead of time. This includes your bank statements, proof of income, and a photo ID.

Complete Your Application

Once you’ve gathered your documents and researched your loan options, it’s time to complete your loan application with the lender of your choice. Once you submit your application, you’ll get an email within a few hours to a few days notifying you if you’ve been approved.

How To Improve Your Chances Of Getting Approved For A Loan While On ODSP

When your income is coming from ODSP, it means you’re in a unique financial situation, this can sometimes make the loans application and approval processes a bit more complicated. Since those who apply for personal loans often need the money as soon as possible, here are a few steps you can take to make the process as quick and smooth as possible, as well as hopefully increase your chances of getting approved.

Make Sure Your Debt-To-Income Ratio Is Low

If you already have too much debt then getting approved for another loan will be difficult (for anyone, regardless of where their income is coming from). If you need take out a loan to purchase a vehicle or cover the cost of repairs to your home, etc. make sure your others debts, for example, credit card debt, are under control. Lenders are less likely to approve potential borrowers whose income is obviously already tied up in debt repayment.

Consider Getting a Co-signer

While this may not be an option for many potential borrowers, getting a trusted friend or family member to co-sign for your loan is a great way to increase your chances of getting the financing you need.

Apply for a Guarantor Loan  

A guarantor loan also involves finding a co-signer, but is mainly reserved for borrowers who have bad credit. When you apply, your co-signer’s credit and finances will be under the microscope, rather than your own. Once approved, you should receive a loan and interest rate, both of which will vary depending on your cosigner’s financial strength. As you’re still primarily responsible for your loan payments, you should see a credit score boost whenever you make a payment on time and in full, even if your credit report wasn’t examined initially.

It’s important here to be aware of the consequences for not honoring your loan agreement. Not only will you be subject to penalties and interest rate hikes when you start missing payments, but your cosigner will be obligated to pay the balance owed should you go into default (when you can’t afford your payments at all). This could potentially cause severe debt for both parties involved.

Click here if you’re still trying to decide if a guarantor loan is the right option for you. 

Shop Around

If you have specific loan needs or are in a unique financial situation, it is, without a doubt, in your best interest to shop around for the best deal and the best lender. Do your research before you settle on a loan or a lender and always make sure the lender you’ve chosen is legitimate, like Mogo.

Find the Right Lender

One of our top pieces of advice for anyone with specific financial needs who are looking to get approved for a personal loan is to find the right lender to work with. This will make all the difference. Some lenders have stricter requirements, some only lend to certain categories of consumers, and some pull credit. Find a lender that fits your needs and you’ll be even closer to getting approved for the loan you want.

Loans For ODSP FAQs

Can I get a payday loan while on ODSP?

Yes, you can get a payday loan while on ODSP in Canada. You simply need to find a lender who accepts non-traditional forms of income like CCB, CPP, EI, and other government benefits.

Can I get a ODSP loan without a credit check?

Yes, generally you can get a ODSP payday loan without a credit check. 

Can I receive an ODSP payday loan via e-transfer in Canada?

Some ODSP payday lenders will send you your funds via e-transfer. Some of these lenders include iCash and Cash Money. 

What documents do I need to apply for a payday loan for ODSP?

When applying for a payday loan while on ODSP, you’ll need to provide some information that will verify your identity and income. Generally, lenders will ask for personal details such as your name, date of birth, address and contact information. They usually will require a government-issued photo ID. Moreover, you’ll need to provide details about your ODSP to verify your income. Lastly, You’ll need to provide some banking information for funding and repayment.

Get More Information Today

If you’re interested in applying for a loan or want more information on our application process, get in contact with us today.


Rating of 4/5 based on 8 votes.

Caitlin is a graduate of Dawson College and Concordia University and has been working in the personal finance industry for over eight years. She believes that education and knowledge are the two most important factors in the creation of healthy financial habits. She also believes that openly discussing money and credit, and the responsibilities that come with them can lead to better decisions and a greater sense of financial security. One of the main ways she’s built good financial habits is by budgeting and tracking her spending through the YNAB budgeting app. She also automates her savings so she never forgets to put aside a portion of her income into her TFSA. She believes investing and passive income is key to earning financial freedom. She also uses her Aeroplan TD credit card to collect Aeroplan points so that she can save money when she travels.

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