Employment Insurance (EI) helps countless Canadians every year get back on their feet after the loss of a job. Even if you got a severance package, EI still kicks in after those severance benefits run out.
Unfortunately, EI 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. However, can you get approved for a loan while on Employment Insurance?
Thankfully, it is not impossible, and there are different types of loans out there that you can get while receiving Employment Insurance.
Key Points
- Being on EI doesn’t necessarily disqualify you from loan programs in Canada.
- Many alternative lenders accept EI as an income source.
- However, these loans may come with lower loan amounts and higher interest rates due to the higher risk for the lender.
Can You Qualify For A Loan On Employment Insurance (EI) In Canada?
Yes, you can qualify for a loan while receiving Employment Insurance in Canada. However, it can be challenging since EI is not considered a traditional source of income. Given this, lenders may have stricter requirements.
Further, you may not be able to access loans from traditional lenders if you only earn income from EI benefits. Instead, you may need to rely on alternative lenders who accept non-employment sources of income, like EI or other government benefits. These lenders may place more weight on different factors, such as your credit score, debt level, and assets.
Borrow Up To $50,000
Can You Get A Personal Loan On EI?
An EI installment loan can be a good option as they have lower rates and longer terms, making it easier to repay. Moreover, while installment loan lenders typically have higher requirements than payday lenders, 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 and usually your credit score to ensure you can manage the loan.
Learn more: Best Personal Loans
Can You Get A Payday Loan On EI?
An EI payday loan will allow you to access up to $1,500, depending on the lender and your finances. This type of loan is usually repaid by your next payday, up to 62 days.
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.
Can You Get An EI Payday Loan With No Credit Check?
Yes, some lenders in Canada offer EI payday loans with no credit check. In fact, payday loans often don’t require a credit check, making them among the easiest loans to qualify for. That said, you’ll still need an adequate income to qualify for a payday loan, even if it comes from EI benefits.
Given the higher risk for lenders to provide payday loans to those relying on EI for income without conducting a credit check, these loans come with very high interest rates and short repayment terms, making them more difficult to repay.
Can You Get A Personal Line Of Credit On EI?
Yes, you can obtain a personal line of credit while on EI. You might need to apply with an alternative lender who specifically assists borrowers receiving government benefits rather than earning a traditional income. Additionally, you may not qualify for a high credit limit, and your interest rate could be higher.
That said, there are some unique credit products that can provide you with a quick cash fix without the sky-high interest rates or credit requirements that may come with other loan types. Here are a few to consider:
- Nyble: Nyble offers an interest-free credit line of up to $250, with no credit check required. You can access quick funding and use the credit line to build a positive credit profile with timely payments.
- Bree: Bree offers interest-free cash advances of up to $500 with no credit checks required. You can quickly access funds to cover expenses before your next paycheque to avoid NSF fees. Bree also provides budgeting tools to help Canadians better manage their finances.
- Moneyup: MoneyUp offers an instant, interest-free credit line of up to $1,000 with no credit check involved. The product, known as FastForward, provides early access to your next paycheque or government benefit payments without the need to apply for a loan.
Can You Get A Car Title Loan On 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.
Types Of EI Loans You Can Get: Overview
Let’s compare each of the EI loan types you may be able to get while on EI:
| Personal Loan | Payday Loan | Line Of Credit | Car Title Loan | |
| Loan Amount | Up to $35,000 | Up to $1,500 | Up to $50,000+ | Varies depending on the value of the vehicle |
| Interest Rate | 9.99% – 35% | Up to $14 per $100 borrowed | Based on prime rate | Varies; higher than traditional loans |
| Loan Term | 3 – 60 months | Up to 62 days | Flexible | Up to a year |
What Do You Need To Qualify For EI Loans?
Requirements will vary depending on the type of loan you apply for, many of which may overlap between loan types. That said, no matter what type of loan you apply for, you’ll likely need to show the lender the following:
- Proof of EI payments: Again, the lenders may require documentation showing consistent EI income.
- Additional income sources: Some lenders may want to see other sources of income, like rental income or investments, to make sure you can pay your loan off.
- Bank account: The lender may want to verify your bank account to ensure it’s capable of direct deposits.
In addition to these requirements, each loan may have additional criteria to meet:
- Personal Loans & Credit Lines: If you’re applying for a secured personal loan, your lender will want to know the current value of the asset used as collateral. Depending on the lender, your credit report may also be checked. Good credit helps increase your chances of approval.
- Payday Loans: These loans are among the easiest to get, so there may be little more required other than a verification of your EI payments and a valid bank account.
- Car Title Loan: The lender will want to see proof of ownership to verify that there are no existing liens and that you own the vehicle outright. The car must also be insured, so you’ll need to show proof of insurance. Lastly, the lender may want to know the car’s current market value and may order a vehicle inspection as a result.
How To Apply For An EI Loan
To apply for an EI loan, follow these steps:
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 An 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.
Benefits Of Applying For Loans On Employment Insurance Loan With An Alternative Lender
- Convenient: Alternative EI loan lenders usually offer a straightforward and entirely 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 soon you should be able to find a suitable loan and lender that is right for you.
Risks Of EI Loans
An EI loan can be a lifesaver when you’re in a financial pinch but aren’t working just yet. However, there are some risks that you should be aware of before you apply:
- Additional Debt: Borrowing while on EI can lead to more debt, which can be more difficult to manage when you’re not working and rely on fixed government benefits. Plus, if you repeatedly borrow to cover ongoing expenses, you could find yourself trapped in a cycle of debt.
- High Interest: EI loans tend to come with steep interest rates, especially payday loans, making them very expensive and difficult to manage on a lower income.
- Risk Of Losing Your Collateral: If you secure the loan with a valuable asset, like your car (which is the case with a car title loan), you risk vehicle repossession if you fail to keep up with your loan payments.
Alternatives To EI Loans
If you’re on EI and need financial help, there are some alternatives to EI loans that may be available:
- Savings: If you have a savings account, you may consider tapping into it rather than adding more debt in the form of a loan.
- Credit Card: If you have a credit card, consider a cash advance to cover your pressing expenses. Just be aware that they come with high interest, so they’re best used if you think you can repay what you borrow very quickly, or if the rate on your cash advance is lower than the rate you can get on an EI loan.
- Government Assistance Programs: Look into municipal, provincial, and government financial assistance programs available and whether you may qualify. These can include social assistance, disability assistance, rent assistance, and senior assistance programs. One way to find these programs is to use www.211.ca, an online platform that connects Canadians with local programs they need.
- Cash Advance Services: Platforms like Bree, Nyble, and KOHO Cover offer small, interest-free cash advances to help cover expenses without the need for a credit check.
Resources To Help You Find Employment
Finding a job on your own can be challenging, but there are various resources available to help you find work:
- Canada’s Job Bank: The official job search site in Canada features job postings from various industries across the country. The resources also offer career planning tools to help you prepare for employment.
- Employment Agencies: Staffing firms are available across Canada to help local job seekers find work. They typically offer online job listings, resume assistance, and interview preparation guidance.
- Online Job Boards: Online employment marketplaces like Indeed, Monster, and Workopolis list job postings across Canada, and even allow job candidates to apply directly through the website.
- Job Training: Job training can improve your chances of finding work by providing you with in-demand skills, work experience, and connections to employers in various industries. You can get partial funding for such training if money is tight.
What Happens If I Can’t Find A Job And Run Out Of EI?
If you run out of EI and still can’t find a job, consider applying for a social assistance program in your province. These programs provide financial aid to Canadians facing financial hardship and can help cover basic costs such as food, housing, and clothing. Each province’s social assistance program comes with specific eligibility criteria based on income level and financial need. Some programs also provide employment support for those looking to find work:
| British Columbia | Income Assistance Program |
| Alberta | Social Assistance Program |
| Saskatchewan | Income Support Program |
| Manitoba | Employment and Income Assistance Program |
| Ontario | Ontario Works Program |
| Quebec | Social Assistance Program |
| New Brunswick | Income Assistance Program |
| Nova Scotia | Income Assistance Program |
| Newfoundland & Labrador | Income Support Program |
| PEI | Social Assistance Program |
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 track, 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.
