If you have bad credit and are in need of financing, you may be concerned that your poor credit profile will get in the way of securing a loan. In this situation, you may want to seek out lenders that guarantee loan approval. The question is, do guaranteed approval loans exist, and are they legitimate?
Key Points
- Guaranteed approval loans are not exactly legitimate and should be approached with caution when a lender guarantees loan approval without any vetting.
- Legitimate lenders will always vet loan applicants to some extent, particularly regarding minimum income requirements.
- If you have poor credit, you can still get approved for a loan with online or alternative lenders who may not have any credit requirements, though approval is not guaranteed.
Can You Get Guaranteed Approval Loans For Poor Credit In Canada?
Legitimate lenders will never guarantee loan approval without some sort of vetting process. Only fraudulent lenders will promise “guaranteed approval loans,” particularly to bad credit borrowers who may have difficulty accessing credit through conventional means. Other than that, guaranteed approval loans are not offered by reputable lenders.
That said, there are lenders who do offer loans to those with poor credit. These lenders place more emphasis on your income and overall financial health than your credit score.
See How Much You Qualify For
How To Check If Your Lender Is Legitimate?
Always vet a lender before you sign anything or provide sensitive personal or financial information. The easiest way to do this is to use the internet.
Do an online search. Start by checking the lender’s online ratings, including Google Ratings and Better Business Bureau (BBB) ratings. Scan reviews to see if there are any complaints registered against the lender. If there are lots of bad reviews, you may want to look elsewhere.
Check for a lender license. You might also want to verify whether the lender is licensed, especially if you’re dealing with a high-credit lender, such as payday lenders. These types of lenders are required to have an active license in the province where they lend. You can find their license number on their website storefront or by checking the respective provincial government website’s search directory.
Best Legitimate Lenders
Filters
- Amount
- Up to $35,000
- Rate
- 9.99% – 34.95%
- Term
- 9 – 78 Months
- Amount
- Up to $60,000†
- Rate
- 19.99% – 34.99%*
- Term
- 6 – 120 months
- Amount
- Up to $10,000
- Rate
- Varies by product
- Term
- Varies by product
Can I Be Refused A Payday Loan For Any Reason?
While guaranteed approval loans are not exactly legitimate, there are some lenders available that do not turn you down solely because of poor credit. Known as ‘no refusal payday loans’, these small, short-term loans don’t require a credit check.
That said, you’ll still need to meet other criteria, such as minimum income requirements. After all, you’ll still need to show the lender that you have the financial capability of covering your loan payments. No refusal payday loans simply mean you won’t be denied a loan strictly because of a bad credit score, but you may still have to meet other loan criteria, as mentioned.
Learn more: How To Get No Refusal Payday Loans In Canada
Can I Get An Instant Loan In Canada?
Yes, instant loans are available in Canada, though they do not guarantee approval. With an instant loan, you’ll be provided with funds almost immediately after you’ve been approved. While it often takes days for traditional lenders to process loan applications, instant loans are typically approved and funded within hours.
However, instant loans are not guaranteed. You’ll still need to meet other requirements, particularly regarding your income.
Is There Any Way To Guarantee Loan Approval With Poor Credit?
As mentioned above, there’s no way to guarantee loan approval, but there are many ways to increase your chances of qualifying for one. Essentially, you need to make yourself as creditworthy as possible, and thankfully, there are several ways of doing this.
Improve Your Credit Score
If you have time and are not in a rush for some extra money, consider taking a few months to give your credit score a boost. Your credit score is a key factor that lenders examine when you apply for a loan and is an indication of the likelihood that you will make timely loan payments.
While some lenders don’t check your credit, improving your score is still a good way of gaining fast approval and securing a lower interest rate.
How To Improve Your Credit
Some ways to improve your credit score are as follows:
- Make timely, full payments for all your outstanding credit products.
- Reduce your credit utilization ratio to 30%-35% of your available credit. Your credit utilization ratio is the amount of credit you’re using relative to the total amount you can access.
- Review your credit report at least once per year with Equifax and TransUnion and dispute any errors you find that could be damaging your credit scores. You can check your credit score and report through Loans Canada’s Compare Hub.
- Keep new loan applications to a minimum.
- Keep old credit accounts open to extend the length of your credit history.
While it may take some time, the benefits of having healthy credit will be worth the time and effort.
Add A Cosigner To Your Loan
Adding a cosigner to your loan can increase your chances of securing a loan quickly. Their role is to cosign the loan, meaning they promise to repay the debt if the primary borrower defaults. This reduces the lender’s risk, and as such, makes it easier for you to get approved. However, the cosigner is on the hook for the loan if you default.
Reduce Your Debt
Not only can bad debt ruin your finances, but it can also get your personal loan application rejected. Most lenders will evaluate your overall finances, including your debt levels, particularly your debt-to-income (DTI) ratio, which is a measure of your debt relative to your income.
Generally speaking, a DTI of no more than 44% is acceptable to lenders. If your DTI ratio exceeds this level, take some time to pay down your debt to lower this ratio.
What To Do When You Need Access To Fast Cash
Traditional lenders, like banks, tend to take longer to provide loan approval and funding compared to non-conventional lenders, like private and online lenders. Going the traditional route for funding typically means waiting days and even longer before you see any money.
Instead, you may have some luck securing loan approval and accessing to your funds in as little as the same business day when you apply for a loan from an online or alternative lender. Here are some advantages to applying for a loan with these types of lenders:
- Flexible Loan Requirements: Unlike banks that put a great emphasis on credit scores, bad credit lenders assess your bad credit loan eligibility on other factors. These include your income, employment stability, and DTI ratio.
- Easy Application: Traditional banks require a lot of unnecessary paperwork that can make the loan application process a nightmare. Instead, bad credit lenders are designed in a way to get you cash when you need it. Applications are often very simple and only take a few minutes to complete.
- High Approval Rates: A bad credit lender’s whole business relies on providing loans to borrowers with less than perfect credit. As such, their approval rates are much higher than traditional banks.
- Fast Approval And Funding: Many online lenders who work with bad credit borrowers can provide loan approval within a few minutes of application submission. Then, funding can be made accessible within hours of loan approval, often on the same day. This is great for those who need extra cash urgently.
- Build Credit Accepted: When you have bad credit, it can be hard to rebuild your credit score because the banks are not willing to work with you. Alternative lenders give you the opportunity to rebuild by giving you access to different credit products.
Are Guaranteed Approval Loans For Poor Credit In Canada A Scam?
This is where credit users need to be cautious. No loan can be legitimately 100% guaranteed.
Some “lenders” may offer this, but beware. They may be scam artists who prey upon those desperate for loans. Scam artists are getting more creative all the time. They can be extremely convincing, so it’s important to do research when comparing lenders in Canada.
How To Spot A Loan Scam
Offering guaranteed approval is one way that scammers attempt to take advantage of you. Here are a few signs that the lender you’re dealing with is a scammer:
- Upfront Loan Insurance Fee Demanded – One way that scammers try to manipulate you is by bringing up the idea that they’re risking something by taking you on as a client. So, they may demand an advanced loan insurance fee upfront in exchange for the “risk” they’re taking. In Canada, it’s illegal for a lender to ask for any upfront fees for a loan, so you’re likely dealing with a scam in this case.
- Pressure To Apply Immediately – All legitimate loan sources need to abide by the laws that govern the lending industry in Canada. One of these strict regulations is that no legal lender is allowed to use forceful or threatening language or pressure you to surrender your personal or banking information. Walk away if you feel pressured to sign on.
- Suspicious Funding Methods – Most lenders will offer a few different ways that you can receive your money, with e-Transfer and direct deposit being among the most common. If a lender asks for your online banking information so they can deposit money into your account or wants to give you your loan via gift cards, it may be a scam.
Bottom Line
Guaranteed approval loans may sound tempting, especially if you’re struggling to get approved for a loan, but they’re far from legitimate. But, that’s not to say you can’t find loans for poor credit. As mentioned, there are many lenders in Canada who cater to those with poor credit, allowing you to get your hands on much-needed funds without having to meet strict credit requirements that are typical of traditional lenders.
Guaranteed Approval Loans For Poor Credit In Canada FAQs
Will bad credit affect my loan approval?
Can I get guaranteed approval with no credit check?
I need a loan right away. Can I get instant approval?
How much money can I get approved for with poor credit?
®Fairstone Financial Inc. is a wholly owned subsidiary of Fairstone Bank of Canada.
*Interest rates are subject to change. Actual Annual Percentage Rate (APR) varies based on the province of residence and individual factors like credit details and loan amount. The interest rate on an unsecured personal loan is 31.99% in BC.
†On approved credit. Terms and conditions apply. Interest rates vary by province/territory and from customer to customer based on factors like credit score and borrowing history. See Fairstone’s website for details.
Fairstone Financial Inc. holds high-cost credit licenses in AB, MB (License #85047, expiring 20-02-2026) and QC; it has applied for a high-cost credit grantor license in NL. For license information by province, visit Fairstone.ca/HCCG
In Ontario, Fairstone Financial Inc. is licensed as mortgage brokerage 10821.
In Nova Scotia, Fairstone Financial Inc. is licensed as mortgage lender #2021-3000028.
