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Getting a personal loan without a bank account can be difficult. If you don’t have a bank account, you’re not alone. According to a recent report by the Canadian Prepaid Payments Organization (CPPO), 10 to 20 million Canadians are either underbanked or unbanked. This means that these individuals do not have access to common banking services and products such as chequing or savings accounts. 

The thing is, most lenders require you to have an active bank account to assess your financial health and for funding and repayment. Thankfully, no bank account loans in Canada exist, though your options may be limited. 


Key Points

  • A no bank account loan does not require a bank account, and instead provides funding through other means, such as cash or prepaid cards.
  • To get a no bank account loan, you’ll need to prove to your lender that you earn a sufficient income and have a stable and reliable job by providing pay stubs and/or an employment letter.
  • Keep in mind that no bank account loans are riskier for lenders, and as such, you’ll likely pay higher interest.

What Is A No Bank Account Loan?

A no bank account loan is a type of loan that is available to those without a chequing or savings account. While these loans may not require a bank account, they typically come with higher interest rates and fees. As such, it’s important to carefully consider the risks and costs associated with these types of loans.

Note: No bank account loans are not the same thing as no instant bank verification loans.


Can You Get A Loan Without A Bank Account In Canada?

Yes, it’s possible to get a loan without a bank account, but your options will be quite limited. Lenders typically require loan applicants to have a bank account for a few reasons:

  • Loan Funding: Lenders often directly deposit loan funds into borrowers’ bank accounts.
  • Loan Repayments: Lenders often automatically withdraw funds from a borrower’s bank account for repayment purposes.
  • Verification Of Financial Stability: Lenders want to be able to see if a borrower has the financial capability of repaying a loan.

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Where Can You Get A Loan Without A Bank Account?

With no bank account, your borrowing options may be limited to pawnshop loans and payday loans.

Pawn Shop Loans 

Certain pawn shops offer loans to consumers who provide a valuable item as collateral. The shop keeps the item until you can pay off the loan plus interest. Pawn shop loans are typically small, around $150, and expensive. Interest rates can be 100% or more. Furthermore, if you default on the loan, the shop has the right to sell your item to recoup payment.

  • Eligibility:
    • Age of majority in your province
    • Own a valuable item to use as collateral (ex: bicycle, musical instrument, gaming equipment, etc.)
  • Loan Amount: Depends on the value of the item (on average around $150)
  • Rate: Varies
  • Funding Time: Immediate (no more than one day)

Learn more: Pawning Your Stuff: An Easy And Accessible Way To Get Small Secured Loans

Payday Loans

If you don’t have a bank account, you will need to look for a payday lender that will fund the loan via cash or prepaid card. You’ll also need to find a payday lender who is willing to assess your creditworthiness via pay stubs, employment letters and other related documents. 

Payday loans typically offer no more than $1,000 to $1,500 and provide much-needed funds within a very short period. Borrowers can get their hands on the money within as little as 24 hours. 

  • Eligibility:
    • Canadian resident
    • Age of majority in your province
    • Proof of income
  • Loan Amount: Up to $1,500
  • Rate: $14 per $100 borrowed in all provinces except Quebec (35% AIR)
  • Funding Time: One day or less

Learn more: How Do I Find A Payday Loan Near Me?


Don’t Have A Bank Account? Get One For Free

If you’re unable to get a loan specifically because you don’t have a bank account, then it’s wise to open one right away. This is especially true considering you can get an account for free.

Getting a bank account doesn’t have to be expensive or complicated. In fact, there are many bank accounts that have zero monthly fees and no transaction fees. Moreover, to open a chequing account in Canada, you’ll simply need a photo identification, proof of address, and potentially a phone number and email address. 

Here are a few no-fee accounts to consider:

Simplii Financial No Fee Chequing AccountLearn More
Wealthsimple Cash AccountLearn more
Neo Everyday AccountLearn More
Tangerine Learn More
EQ Bank’s Savings Plus Account ReviewLearn More

Learn more: Where Can You Get Free Bank Accounts In Canada?


How To Apply For A Loan With No Bank Account?

If you have no bank account and want to apply for a loan, follow these steps:

Step 1: Research Loan Options

Use an online loan comparison platform, like CompareHub, to find lenders with loan criteria that match your financial and credit profile, particularly those that don’t require a bank account. Compare their loan offers, including their rates and terms, then choose one that aligns most closely with your needs.

Step 2: Gather Documentation

Prepare required documents, such as:

  • Proof of income
  • Proof of employment
  • Photo identification
  • Collateral (if required)

Step 3: Submit Your Application

Complete the lender’s application form and submit it along with all the necessary documents. Depending on the lender, this may be done either online or in person.

Step 4: Wait For Approval

Approval times vary based on the lender. Whether you apply online or in-person, you may receive a response in as little as a few hours following application submission. 

Step 5: Receive Funds

If approved, you’ll receive your loan amount shortly after. However, without a bank account, you’ll receive the funds either via cash or on a prepaid card


Pros and Cons of Loans Without A Bank Account

Before applying for a loan without a bank account, it’s helpful to weigh the pros and cons to ensure this loan type is right for you.

Pros

Some benefits of a loan without a bank account include the following:

  • Accessibility For The Unbanked: If you don’t have access to traditional banking facilities or are unable to open an account, a loan without a bank account may be your only option.
  • Alternative Funding Methods: While traditional loans may deposit funds into your bank account, a loan without a bank account uses other funding methods, such as cash, cheques, or prepaid debit cards.
  • Quick Approval: These types of loans typically involve little paperwork and are processed more quickly since the bank verification process is bypassed.

Cons

Along with the perks of these loan types are some drawbacks, as follows: 

  • Higher Interest Rates And Fees: Loans with no bank account tend to come with higher interest rates and fees, making them more expensive than traditional loans.
  • Lower Loan Amounts: You may not be able to qualify for a larger loan amount if you have no bank account for your lender to use to verify your finances or withdraw from when collecting repayments.
  • Predatory Lenders: Some predatory lenders lurk within the no bank account lending sphere. These scammers seek out vulnerable borrowers and take advantage of them through unnecessary fees and unfavourable loan terms.

Should You Get A Bank Account? 

Getting a bank account is typically a good idea. Not only does it provide you with a safe place to store your money, but it’s also a necessity when it comes to things like getting paid at work and accessing financial products, like credit cards. You can also have your government benefit payments deposited straight to your account for a faster and more convenient funding method. 

Moreover, you can use your bank account to make online payments and manage your savings. 

Benefits Of Applying For A Loan With A Bank Account

While no bank account loans may be available, you’ll have many more options to choose from if you have a bank account to support your loan application. Here are a few perks of applying for a loan with a bank account:

  • Faster Approval: Thanks to services like instant bank verification (IBV), lenders can quickly and easily verify your financial information, which can expedite the process.
  • Lower Interest Rates: Banks and lenders perceive those without a bank account as a higher risk because they’re unable to verify their financial stability, income, and spending patterns. On the other hand, lenders may be more willing to offer lower rates to people with bank accounts because of the lower perceived risk.
  • Convenient Repayment: With an active bank account that’s capable of accepting direct deposits and withdrawals, you can set up loan repayments to have them automatically deducted from your account to simplify loan management.

Learn more: Open A Bank Account Online In Canada


Final Thoughts

No bank account loans provide funding to those without access to conventional banking. Rather than depositing money into a bank account, lenders fund borrowers via cash or prepaid cards. Although no bank account loans might make borrowing financing more accessible to the unbanked, they come with higher costs and risks. Instead, you may want to consider opening a bank account to open up more opportunities for financing products.


No Bank Account Loans FAQs

Do I need a job to get a loan?

No, you do not need a job to apply for a loan, but your options will be limited and expensive. Payday loans and pawn shop loans may be your only choices. You will also still need to prove that you can repay the loan.

Do I need a bank account to get a loan?

No, certain lenders fund loans with cash or through debit cards. Keep in mind that these loans are expensive and are considered a last resort.

Are payday loans bad?

Payday loans are expensive and can trap borrowers into a cycle of debt that is hard to get out of. This is why payday loans are considered a loan of last resort.

Are bank accounts free?

Depending on the type of account you choose, you may have to pay a monthly service fee. But, almost all banks offer some type of free account.

Lisa Rennie avatar on Loans Canada
Lisa Rennie

Lisa has been working as a personal finance writer for more than a decade, creating unique content that helps to educate Canadian consumers in the realms of real estate, mortgages, investing and financial health. For years, she held her real estate license in Toronto, Ontario before giving it up to pursue writing within this realm and related niches. Lisa is very serious about smart money management and helping others do the same.

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