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📅 Last Updated: December 21, 2023
✏️ Written By Bryan Daly
🕵️ Fact-Checked by Caitlin Wood

Life happens and unexpected expenses can pop up quickly. You might be thinking an instant loan would be really helpful. Personal loans are a useful financial tool when used responsibly. Quick approval times, simple applications, and manageable eligibility requirements. What more could you ask for?

While an instant loan is possible, it’s important to understand what that means for your finances and how to choose the right option for your needs.

Instant Loans vs. Payday Loans

While a payday loan can fall under an instant loan, it is not the only one. There are other types of loans you can get instantly including personal loans, auto title loans and credit card cash advances. 

Instant Loans

An instant loan is almost exactly how it sounds; a variable amount of liquid money that you can borrow instantly. While it can take days to process traditional loan applications, instant loans are usually approved and funded within 24-48 hours.

Instant Personal Loans

A personal loan is an installment-based loan that you repay periodically within a certain time frame. These loans typically have lower interest rates than payday loans and offer much longer terms, making it a more affordable instant loan option. You can find these loans with numerous online lenders. Applications are short and simple and you can expect to be funded within 1-2 days after approval. 

Instant Auto Title Loans

An auto title loan is a loan that is secured against the title of your car. To be eligible, you must completely own the car and have no liens against it. This option is great for those with poor credit and finances as the title provides extra security to the lender, which increases their chances of approval. These loans are typically short-term, lasting around 3 months to 3 years. Interest rates are high, as are the fees, but they are easy to qualify for and provide fast funding. 

Instant Credit Card Cash Advance

A credit card cash advance is another way to get cash instantly. This can be a particularly appealing option as there are no requirements or applications to fill out, so long as you have a credit card handy. However, this convenience comes at a cost. There is a cash advance fee and interest rates are extremely high, ranging around 30%. Interest also begins to accrue the day you withdraw the money.

Instant Payday Loans

While it’s technically an ‘instant’ loan, a payday loan is usually smaller and involves a much shorter repayment term. They’re also far more expensive overall. In fact, payday loans are deemed predatory and are heavily regulated in most parts of Canada.

  • Repayment terms are only 14-days long
  • Many provinces/territories have physical outlets where you can apply 
  • Getting approved can be somewhat easier
  • Interest rates are far higher and non-adjustable (often over 300% APR)
  • Numerous provincial and federal laws apply due to the debt they can cause
Maximum Interest Rate Payday Lenders Can Charge By Province

The maximum a lender can charge you per $100 borrowed varies by province. Here is the maximum your lender can charge you: 

  • Ontario, British Columbia, New Brunswick and Alberta – $15 per $100 borrowed
  • Manitoba and Saskatchewan – $17 per $100 borrowed
  • Nova Scotia – $19 per $100 borrowed
  • Newfoundland and Labrador – $21 per $100 borrowed
  • Prince Edward Island – $25 per $100 borrowed

Instant Loans vs. Payday Loans

Key differences between instant loans and payday loans: 

  • Term Length – Repayment terms are adjustable and may last several months to several years.
  • Approval Requirements – Approval restrictions may be slightly harder to pass.
  • Interest Rates – Interest rates are also adjusted according to your finances.
  • Prepayments – Prepayments are often possible.

Where To Get An Instant Loan

Although many prime lenders, such as banks have their own loan products with varying conditions, getting approved is normally tougher and deposits may take several business days to go through, which isn’t great if you’re dealing with a financial crisis.  

Don’t worry, because there is an increasing number of subprime lenders popping up across Canada and most of them can offer you an instant loan with minimal approval requirements. 

Before giving any of your personal or financial information away when you apply, be sure to research your lender properly to confirm that their organization is legitimate and offers the safest loan products for you. 

How To Qualify For An Instant Loan In Canada

Depending on the lender you apply with, some will accept those with poor credit, while others will have more stringent requirements. That said, the weaker your finances and credit are, the harder it is to obtain a large loan with a decent repayment plan and an affordable rate. After all, most lenders will check your income, debt levels, and credit report when you apply to see whether you’ll make payments as agreed. 

In general, when you apply for an instant loan, your lender will require the following: 

  • Employment Proof – Lenders want to see that you have a stable enough income to repay the loan. 
  • Income Level – Lenders will also check the level of your income to ensure it can cover the loan amount you are applying for. 
  • Debt Level – Lenders will also check your debt level in conjunction with your income to see your debt-to-income ratio. 
  • Credit Check – While some lenders will require a credit check, others may not. Typically payday lenders and auto title lenders do not, while some personal loan lenders do. 

Advantages Of An Instant Loan

Luckily, getting the right instant loan from the right lender will offer up many perks that can benefit your finances, such as:

  • Fast Funding – With instant loans you can get approved and funded within 24 – 48 hours, making it an incredibly useful product during financial emergencies. 
  • Online Availability – Instant loans are available through many subprime lenders across Canada. Moreover, the whole process can be conducted online. 
  • Improve Credit Score – Some online instant loan lenders report payments to the credit bureau. This can help you build a healthy credit history if you make full on-time payments. If you’re interested in monitoring your credit score, check out a free credit score provider like CompareHub.

Disadvantages Of An Instant Loan

Then again, it’s equally important to consider the drawbacks associated with this kind of loan, as they can harm your finances. For example:

  • High-Interest Rates – Many instant loan lenders, particularly auto title lenders and payday lenders have extremely high-interest rates. 
  • Small Loan Amounts – If you have poor credit, the loan amounts you’ll find for an instant loan will be much small.
  • Predatory Lenders – People in a pinch are prime targets for predatory lenders and scammers. When taking out an instant loan, be sure to research your lender before applying and providing any sensitive information. 
  • Can Hurt Your Credit – If you default on your loan, it can lead to penalties, added interest, and hits to your credit.

Should You Get An Instant Loan?

Remember, some instant loans have relatively high rates and administrative fees compared to more traditional loan products. You must also consider the actual cost of your installments, as well as any penalties that could apply for various reasons.

Unfortunately, there are also many predatory lenders and scam artists out there who are looking to take advantage of borrowers who need fast access to credit, especially those who have trouble getting approved because of poor financial health. 

Due to these dangers, you should only apply for an instant loan when you:

  • Have gotten proper advice and researched your lender thoroughly
  • Have an income and savings that can support all costs involved
  • Have a financial emergency to cover
  • Want to consolidate high-interest debt
  • Plan to spend the money on necessary expenses

Always Consider These Factors When Looking For An Instant Loan

Let’s discuss some of the things to watch out for when it comes to instant loans in Canada:

Potentially High Rates

Your interest rate can definitely drive up the price of your loan payments. While you can usually find adjustable rates, they are higher on average because most instant loans are unsecured and riskier for the lender.    

Several Fees May Apply

You could also be subject to fees for applying, borrowing, and defaulting on your loan, including but not limited to loan origination, late payments, prepayments, and rollovers (only permitted in some provinces/territories). 

Repaying Your Loan

Speaking of fees, you should also be aware that most lenders will automatically withdraw your payments upon each due date. If your account shows NSF, the lender might charge you a hefty penalty. However, most lenders can modify your repayment plan to allow for:

  • Weekly installments (52/year)
  • Bi-weekly installments (26/year)
  • Monthly installments (12/year)
  • Semi-monthly installments (24/year)
  • No or low-cost prepayments

Need An Instant Loan?

If you’re looking to cover a financial crisis or another urgent expense, an instant loan can provide much relief. However, be sure to review your options and choose a lender and loan option that best suits your needs.

Instant Loan FAQs

What Is An Unsecured Loan?

An unsecured loan means you don’t have to offer collateral to be approved, which traditional lenders may ask in exchange for better rates and conditions. Unsecured loans on the other hand imply more risk for the lender, so they only offer higher rates and stricter terms for smaller loans. 

How do I avoid an instant loan scam?

To avoid falling for an instant loan scam make sure you research the lender you are working with. Scammers will often have fake addresses, no online reviews and a low online presence. You can also watch out for red flags such as upfront loan fees.

Will an instant loan affect my credit? 

Yes, an instant loan can affect your credit in several ways. For one, if your lender checks your credit report (most do), a hard inquiry will appear on your credit history and could temporarily decrease your score by a few points. Similarly, if you make late payments, your lender may report them to the credit bureau. If you completely default on your loan, your lender may sell your account to a collection agency which can damage your credit. 

Caitlin Wood Priyanka Correia Lisa Rennie Bryan Daly Cris Ravazzano Margaret Johnson Kale Havervold Liz Enriquez Sean Cooper Veronica Ott Corrina Murdoch Chrissy Kapralos

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