Loans While On Employment Insurance Benefits

Loans While On Employment Insurance Benefits

Written by Caitlin Wood
Last Updated December 7, 2021

Unexpected situations and emergencies can happen to anyone, no matter what your employment or financial circumstances are. So even though you may be on Employment Insurance (EI), needing a loan to cover an unforeseen cost could still happen to you.

Getting approved for a loan while on Employment Insurance may seem impossible given that it isn’t a traditional source of income. However, the good news is that it is not impossible and that there are different types of loans out there that you can get while receiving Employment Insurance.

Types Of EI Loans

Employment Insurance (EI) helps countless Canadians every year get back on their feet after the loss of a job. Unfortunately, the benefits aren’t always enough to cover the cost of daily living as well as the cost of an emergency or unexpected event. It’s not uncommon for those on EI to need additional financial assistance; this is where a loan can help.

Payday Loans For EI

An EI payday loan will allow you to access up to $1,500. This type of loan is usually repaid by your next payday, which can range from 1 to 4 weeks. Depending on the province you reside in, rates can go as high as $25 per $100 you borrow. 

To qualify for an EI payday loan, you’ll need to find a payday lender who accepts EI as a form of income. You can apply for an EI payday loan online or in-store, you simply need to be able to prove you do receive EI. 

Cost Of Borrowing A Payday Loan While On EI

Depending on the province you live in, the cost of borrowing $100 will vary.

ProvinceMax cost per $100 borrowed
 (Max Interest Rate)
British Columbia$15
Newfoundland and Labrador$21
Nova Scotia$19
New Brunswick$15
Prince Edward Island$25
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.

Installment Loans For EI

A more affordable option would be an installment loan. An EI installment loan can be a better option as they have lower rates and longer terms, making it easier to repay the loan. Moreover, while installment loan lenders typically have higher requirements than a payday lender, they are much more flexible than banks and other traditional financial institutions.

To qualify for an EI installment loan, you’ll need to find a lender who accepts EI as a form of income. However, these lenders will also look at your debt to ensure you can afford to take on the loan. 

Personal Line Of Credit For EI

If you’re trying to qualify for a personal line of credit while on EI, you’ll need to find a lender who accepts EI as income. Some well-known lenders that offer personal lines of credit to those who get EI are Cash Money and Mogo. This can be a great option as interest is only charged on the amount you use. Moreover, like a credit card you can re-access the same funds as you repay the money. 

Car Title Loan For EI

A car title loan is another type of loan you can get while on EI. Since a car title loan is secured by the car itself, lenders are more willing to lend to individuals with poor credit and non-traditional forms of income. This ensures the lender can recoup payments even if you end up defaulting on the loan. However, it’s important to remember that car title loans come with high-interest rates and have short terms, which can make them very difficult to repay. 

Best EI Loans In Canada 2022

Types of LoanFunding Time
Lending MateUp to $10,00043%36 – 60 Guarantor loanWith 24 hoursMore Info
Magical CreditUp to $20,00019.99% – 46.8%6 – 60Personal loanSame dayMore Info
LendDirectUp to $15,00019.99% Open-endLine of creditSame dayMore Info
ICashUp to $1,50015% – 23%Payday loanWithin 24 hoursMore Info
Captain Cash$500 – $75028% – 34.4%3Short-term loanSame dayMore Info
Cash Money$100 – 10,0006 – 60Line of creditWithin 24 hoursMore Info
Cash4You$1,000 – $15,00046.93%12 – 60Personal loanWithin 24 hoursMore Info

Benefits Of Applying For An EI Loan With An Alternative Lender

  • Convenient – Alternative EI loan lenders often have a simple and fully online application process.
  • Fast Funding – Many EI loan lenders have an automated underwriting process which results in quick approvals and fast funding. Most lenders will fund you through direct deposit or e-transfer. 
  • Accepts A Variety of Borrowers – Alternative lenders usually have flexible requirements that allow those with non-traditional sources of income and those with subprime credit the opportunity to get a loan. 
  • Free Instant Loan Quote – Many lenders also provide free instant loan quotes. You can find out how much you may qualify for based on a few questions. This usually will not hurt your credit score as there is no credit check involved. 

Getting approved for a loan while on EI is possible, you just need to find the right lender who can and is willing to work with you. Do your research and before long you should be able to find a loan and a lender who are right for you. 

Steps On How To Apply For An EI Loan In Canada

A more traditional bank or lending institution may deem you an undesirable candidate for a personal loan because they often focus their approval on factors such as your credit score, income level and whether you have a steady job. Unfortunately, if you don’t meet their requirements you will more than likely be rejected. This is why we recommend that you work with a more specialized lender who accepts non-traditional sources of income and borrowers with different credit profiles.

How To Apply For An EI Loan

3 Steps To Apply For An EI Loan

Step 1: Review Your Finances

Before applying for any loan, it’s important to understand where you stand with a lender. Lenders will look at your income, debt-to-income ratio, credit history, and other factors that affect your financial health. By reviewing your finances prior to applying for a loan, you’ll know which lenders you’ll have a chance with. This will help you avoid applying with lenders whose basic requirements you don’t meet, which can then prevent any unnecessary credit checks which can hurt your credit.   

Step 2: Compare Lenders And Get A Loan Quote

Before choosing to work with a lender, it may be in your best interest to get a few loan quotes so that you may compare multiple offers. This can help you save hundreds of dollars in interest and fees. If you’re unsure about how to go about doing that or simply do not have time, you can use a loan comparison platform like Loans Canada. You simply need to complete a single application to receive multiple loan offers. 

Step 3: Get A EI Loan

Once you’ve reviewed your options, simply choose the lender you want to work with. You may need to send additional information to complete the application. Once you’ve been approved, the lender will send you the funds. 

Alternative EI Loans: A Guarantor Loan

Getting a guarantor loan can be an efficient way of financing your expenses while you’re looking for a new job or when your bad credit prevents you from being approved by traditional lenders, such as banks and credit unions. To do this, you would have to find a responsible borrower with good credit and finances. They will then co-sign your application, thereby strengthening your creditworthiness and greatly increasing your chances of approval.

Pros Of Guarantor EI Loans:

  • Your bad credit (if that’s the case) will no longer be an issue since your lender will be examining your co-signer’s credit instead.
  • Even if your credit is not an issue, you’ll still be primarily responsible for your loan payments. This means that your credit will still be improved with every timely, full payment you make.
  • You may be approved for a more affordable interest rate, making your loan cheaper over time.

Cons Of Guarantor EI Loans:

  • As it would be with a regular loan, you might be charged a penalty and added interest if you default (don’t make your loan payments on time or don’t follow your loan contract in some other way).
  • Your guarantor becomes the primary payment maker if you default for too long, which ultimately results in them being in debt. That debt might lead to more severe consequences for both you and your guarantor if they also can’t afford the loan payments.

Employment Insurance FAQs

What is Employment Insurance (EI)?

The Employment Insurance program is operated by the Government of Canada to help support Canadian workers who have lost their jobs through no fault of their own. Those who qualify will be able to take advantage of the benefits while they actively look for new employment. Keep in mind that you’ll only be eligible to receive 55% of your previous income through the program.

Can I get a payday loan while on EI?

Yes, you can get a payday loan on EI, however, you can also get an installment loan, personal line of credit or a car title loan while on EI. 

Can I get a loan if I’m on EI and have bad credit?

Yes, you can still get a bad credit loan while on EI. Generally, a payday loan will be the easiest to qualify for, however, it does come with significant risks. 

How does Employment Insurance work? 

When you have a job, your employer deducts an Employment Insurance premium from your pay. Your employer will then also contribute to your premium, 1.4 times the amount you contributed. Then should you ever lose your job for a reason that is no fault of your own, you’ll be able to collect and live off of the Employment Insurance program for a period of time.

Is employment insurance considered as income by lenders? 

Yes, some lenders in Canada will accept EI, CCB, social assistance payments and other government benefits as income. However, since these forms of income are only fixed for a period of time, lenders may offer shorter terms and higher rates due to the increased risk they take.  

How much money can I get through EI?

Generally, you can get up to 55% of your average earnings for a period of 14 to 45 weeks. However, the amount you can receive in a week is capped at $524. The amount you receive also varies based on how much you earned and what the unemployment rate is in your area. 

For all the information you need on Employment Insurance, visit the Government of Canada’s website.

Loans For Borrowers On Employment Insurance (EI)

Being on Employment Insurance (EI) is probably not something you had ever expected or wanted, but that’s the thing about jobs, life and money, they can be unpredictable even when you think you have it all figured out. At Loans Canada we will be there with the financial help you need when life has gone off the tracks, but we also practice responsible lending practices. There is a right way and a wrong way to take out a loan when you’re on EI. Protecting your financial future is our number one goal and we’ll work with you to get you the appropriate loan for your unique financial situation.

Rating of 4/5 based on 5 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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