Written by: Caitlin Wood
While you might think that it’s impossible for someone in Canada to get approved for a loan with no credit check, this is in fact not the case. No credit check loans in Canada are a great substitute for more traditional loans from banks and other big financial institutions.
No credit check lenders won’t pull your credit score in order to assess your creditworthiness; instead, you’ll need to provide an alternative way to verify that your current financial situation can support additional financing.
Lenders That Won’t Check Your Credit Score
If you’re looking to get a loan from a bank or other more traditional financial institution a credit check is always required. This is how banks assess a potential borrower’s creditworthiness.
If you have a weak or low credit score, you might want to avoid applying for a loan from bigger financial institutions. If you want a quick, short-term loan or just a loan with no credit check then you should consider the following types of lenders:
|Alternative lenders||Typically found online and are willing to work with borrowers that get rejected by banks.|
|Private lenders||Don’t need to follow the same strict guidelines that banks often do|
|Niche-focused lenders||Work with specific groups of borrowers or specific assets (for example, a private mortgage lender or title loan provider)|
Can You Get A $5000 Loan In Canada With No Credit Check?
Banks, credit unions, and other A-lenders use credit checks as part of their approval process. A credit check helps a lender determine the likelihood of a borrower making their payments on time. If you’re looking for a $5000 loan in Canada, most lenders will want to perform a credit check.
How To Get A $5000 Loan With No Credit Check?
If you have bad credit or simply do not want a lender to pull your credit, these tips are for you:
- Find a lender who bases their approval purely on your ability to pay back the loan
- Find a lender who uses bank statements to approve loan applications
- Be prepared to pay higher interest rates
- Ask for preapproval or a quote
- Consider a bad credit lender, they will still check your credit but approve those with low scores
Get Up To $50,000
Common Types Of No Credit Check Loans
As mentioned, there are many types of loans that do not require a credit check. However, most loans that do not require a credit check have high-interest rates and short repayment periods. Here are some of the most common types of loans with no credit checks:
Payday loans are small loans between $50 and $1,500. They have a short repayment period of 14 days and have extremely high-interest rates that can range around 500% (APR).
Car Title Loans
A car title loan lets you borrow money by using your car as security. These loans are typically small and the amount you get is based on the equity in your car. Interest rates can go as high as 60% and have terms between 3 months to 3 years. Keep in mind that some lenders who offer car title loans will check your credit, but some will not.
For those consumers who have bad credit or do not want their credit check, a guarantor loan can be a viable option. The principal borrower is not required to undergo a credit check, but instead, the consumer who will act as the guarantor will be required to undergo a credit check.
Personal Installment Loans
If you choose to get an installment loan with no credit check in Canada, here is what you can expect to find when applying.
Requirements For A No Credit Check Loan
So, if a lender doesn’t require a credit check to approve a loan, what do they need as a replacement? As we discussed before, by not pulling a credit report a lender will typically verify your creditworthiness via another form of documentation or assessment. Should you choose to work with a lender that does not consider credit ratings in their underwriting procedures, you’ll typically be required to provide one of the following.
Bank Statements For Verification
Some of the lenders that don’t look at credit scores will require you to provide them with bank statements to verify how much money is coming and going from your bank account on a monthly basis. The reason for this is that most lenders want to make sure you can actually afford a loan. If you already have too many financial responsibilities a lender might not want to approve you for a loan. There are many different ways of doing this, but here are a few of the most common:
- Instant banking verification. There are many different programs that provide this service. You’ll log into your online banking through whatever program your lender uses and it will automatically take a snapshot of your account and then build a report. It is the report that your lender sees, not your actual account information.
- E-statements. All banks offer e-statements through their online banking portal, and a lender might request them to validate your financial standing.
- Or you can simply fax your bank statements to your lender.
Documents To Confirm Income
Another way a no credit check lender might want to assess your creditworthiness is through verification of your income. While the majority of lenders want to make sure they’re getting paid back on a regular basis, it’s also important for them to only provide loans to people who make enough money and can actually afford one. Most lenders aren’t looking to create additional financial hardship for their clients.
Collateral As Security
If you feel as though your credit score or financial past will hurt your chances of getting approved for a loan then you might want to consider providing collateral. Most secured loans don’t require a credit check because the asset makes your credit history less relevant. Collateral protects the lender. This is a great way to get a personal loan that is $5000 or greater in size. With a secured loan you often won’t be required to authorize a credit check and your chances of getting a larger loan increase significantly.
Getting A Guarantor
Guarantor loans are also beneficial to borrowers who don’t want their credit checked or who aren’t making an appropriate income for typical loan qualifications. In this case, finding a co-signer is the key. They should be someone with healthy credit and a better income. They would also have to be comfortable with the idea of taking on your loan payments if you become unable to afford them anymore, so make sure they’re well aware of that risk before they co-sign your contract.
Once approved, you should be able to secure a loan at a more reasonable interest rate with no credit check required on your part. However, it should be noted that your guarantor’s credit may be checked to determine their creditworthiness.
Where Can You Get A No Credit Check Loan In Canada?
|Amount||Interest Rate||Term||Province Availability|
|Up to $50,000||Prime to 46.96%||4 - 60 months||Across Canada||Learn More|
|Up to $1,500||Varies by province*||Max 62 days||BC, AB, MB, ON, NB, NS, PEI||Learn More|
|$500 - $750||Varies by province*||90 - 120 days||BC, AB, ON, PEI||Learn More|
|Up to $1,500||Varies by province*||Up to 62 days||BC, AB, ON||Learn More|
|Up to $1,500||Varies by province*||Next payday||BC, ON||Learn More|
|$120 - $1,500||Varies by province*||Max 62 days||BC, AB, SK, MB, ON, NS||Learn More|
|$50 - $1,500||Varies by province*||Up to 31 days||BC, ON, NS||Learn More|
Instant Payday Canada
|Up to $1,500||Varies by province*||Up to 60 days||ON, BC, AB, MB, SK, NS||Learn More|
How To Calculate The Cost Of A No Credit Check Loan
No credit check loans can be quite expensive, before signing a loan contract be sure to evaluate the total cost of your loan. You can use this personal loan calculator to help you calculate the cost of your no credit check loan payments and interest costs.
When evaluating your loan cost be sure to consider the interest rate, fees, and term length. Each factor can significantly affect your no credit check loan costs. The table below shows how your loan costs can vary when these factors change:
|Interest Rate (AIR)||29.99%||46.96%|
|Fees||5% of loan ($100)||2% of loan ($40)|
|Term Lenght||12 months||24 months|
|Total Payments + Fees||$2,439.57||$3,473.39|
|True Loan Cost – APR||40.27%||48.96%|
The Pros And Cons Of No Credit Check Loans
Before applying for any type of loan, you should always do your research and understand its benefits and drawbacks.
- Bad credit accepted – this may be obvious, but the best thing about a no credit check loan is that it does not require a credit check. As such, consumers who have bad credit can get the financial support they need when they don’t qualify with banks due to credit score issues.
- Fast approval time – Many of these lenders are designed to provide borrowers with money quickly. As such, borrowers can expect to get the money they need the same day they apply.
- High cost of borrowing – No credit check loans like payday loans often come with very high-interest rates and short terms. Due to the high interest and short repayment terms, many borrowers aren’t able to make their payments. Some end up rolling over their loans while others end up taking on a new payday loan to pay off their old loan. Unfortunately, this leads consumers into a cycle of debt.
- High-risk lenders – While most lenders who offer no credit check loans are legitimate, there is a higher risk of being preyed upon by a predatory lender
Are No Credit Checks Loans Safe?
There are many predatory lenders out there who provide loans that trap borrowers in an endless cycle of debt. No matter what type of loan you apply for, a personal loan or a no credit check loan, the safety of the loan is dependent on the lender and the terms and conditions of the loan.
Term: Loans with short repayment terms are often dangerous because it results in higher payment amounts. These amounts are harder to pay off and accumulate interest quickly when you are unable to pay.
Rate: Loans with extremely high-interest rates are dangerous as you can end up paying more on interest than the actual principal.
Eligibility: Alternative lenders with flexible requirements is a blessing for many consumers who are unable to get loans from traditional lenders like banks. However, when these requirements are too lax and a lender approves consumers who clearly cannot repay the loan, you know they are dangerous. These are lenders looking to take advantage and trap consumers in a cycle of debt.
Frequently Asked Questions
Can I get A $5,000 loan with no credit check in Canada?
Many lenders won’t provide a $5,000 no credit check loan in Canada. Generally, lenders offer no credit check loans for smaller loan amounts. While many lenders will require a credit check for a $5,000 loan, you may still find some who offer a $5,000 loan with no credit check. These lenders will use your income, debt level, job stability (although some may accept no employment verification), and other financial factors to determine your eligibility. However, do keep in mind that these lenders will likely charge very high-interest rates due to the added risk they’re taking.
Can I get an installment loan with no credit check in Canada?
Yes, there are many alternative lenders in Canada who are willing to provide you with an installment loan without a credit check. However, they will base your creditworthiness on other factors such as your income, employment stability and debt-to-income ratio.
Should I get a payday loan or a no credit check installment loan?
If you have a choice, always choose an installment loan or personal loan over a payday loan. Payday loans are short-term loans that are very expensive with APRs reaching well beyond 400%. Installment loans, on the other hand, have much lower APRs and more flexible repayment options. This ensures your payments are affordable and will not cause financial strain on your day-to-day life.
How can I increase my chance of being approved for a no credit check loan?
When you apply for a no credit check loan, your income, employment stability, and debt-to-income ratio are examined instead of your credit score. As such, improving on these factors can help increase your chances of being approved.
The no credit check approval process is based on more than a 3-digit number. This means that more people are able to get approved for the loans they want and fewer people are rejected for past financial missteps. No credit check lenders are more willing to work with potential borrowers to find loans, terms and products that best suit the financial needs of the borrower.