No Bank Verification Loans: Getting A Loan Without A Bank Account In Canada

If you don’t have a bank account, you’re not alone. According to a 2021 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.

If you (or someone you know) currently do not have access to a bank account then you might be wondering if you can still apply for a loan.

Can I Apply For A Loan Without A Bank Account?

Yes, Canadian consumers without bank accounts can still apply for certain types of loans, sometimes referred to as no bank verification loans. But, it’s important to understand that options will be limited and typically more expensive than loans from traditional financial institutions.

What Is A No Bank Verification Loan?

As the name suggests, a no bank verification loan is a type of loan that requires no documentation to be verified by the lender. Essentially, you can get a loan without having to provide any documentation regarding your finances, assets, or bank account.

Don’t have a job? Find out how you can get a loan while on EI.

No Bank Account Or No Bank Verification Loan Options

Without a bank account, there are only a couple of loan options available to you. These options should only be considered in emergency situations as they are expensive and can cause financial hardship if you are unable to pay them back.

Pawn Shop Loans

Certain pawn shops offer loans to consumers who provide a valuable item as collateral. The shop keeps the item until you are able to 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 and likely will do so.

Eligibility:
- Age of majority in your province
- Own a valuable item to use a collateral
Loan Amount: Depends on the value of the item (on average around $150)
Rate: Varies
Funding Time: Immediate (no more than one day)

Payday Loans

Payday loans tend to be pretty popular for situations like these. Such short-term loans are typically made for no more than $1,000 to $1,500 and provide much-needed funds within a very short period of time. In fact, borrowers can get their hands on the money within as little as 24 hours.

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.

Eligibility:
- Canadian resident
- Age of majority in your province
- Proof of income
Loan Amount: Up to $1,500
Rate: Depends on provincial rules (between $15 – $25 per $100 borrowed)
Funding Time: One day or less

Debit Card Loans

Certain lenders offer debit card loans. This is where funds are loaded onto a prepaid debit card and mailed to you or can be picked up in person. If you take out a debit card loan from a payday lender, you will have to repay the loan by your next payday with cash. If you take out a debit card loan from another type of lender, you may still need to have a bank account where they can withdraw your payments from.

Eligibility:
- Canadian resident
- Age of majority in your province
- Proof of income
Loan Amount: Varies greatly
Rate: Varies greatly
Funding Time: As little as 24 hours

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Can You Get A No Bank Verification Loan With Bad Credit?

What if you have bad credit or no credit, but don’t want your lender to pull your credit? In that case, you’ll have to provide your bank statements to your lender.

Lenders typically do not want to loan out money that they believe might not be paid back. They will still want some assurance that the loan will be repaid, especially when they are dealing with unsecured loans; that is, loans that do not come with any collateral for lenders to recoup should borrowers default on their loans.

In order to protect themselves, lenders will typically either want to see specific financial documentation verifying the ability for borrowers to repay the loans they take out or will pull a credit report. The information contained in a credit report will outline a borrower’s payment history and credit utilization. Such information is valuable for lenders to assess a borrower’s ability to repay a loan.

Pros & Cons Of No Bank Verification Loans

A no bank verification loan may sound great, but like everything else in life, there are some drawbacks. Here we’ve listed both the pros and cons so that you may make an informed decision.

Pros

Easy Application: Due to the lack of documents you need to send, the application process is far more simple than applying for a regular loan.
Faster Approvals: Lenders don’t need to verify must to approve you for a loan. As such the approval times are much quicker.
No Income Requirement: Since you are not required to provide bank verification, the usual income level requirement does not apply.

Cons

High-Interest Rates: Lenders often charge higher interest for the no bank verification loan as it is harder for them to assess your risk. Since the lender is basing your eligibility solely on your credit score, they can’t tell if the loan they give you will tip your debt to income ratio into the red zone.
Small Amounts: If you’re looking for a large loan, a no bank account loan is not the option for you. These types of loans are typically less than $1,500.

Consider Opening A Bank Account

Having your own bank account will not only make it easier to apply for loans but will make all aspects of your financial life more convenient.

How To Open A Bank Account In Canada

Here are the steps you can take to open a bank account at whatever bank you choose.

1. Choose The Right Bank

There are lots of options to choose from when it comes to banks in Canada. You can choose between the Big Five or go for a smaller online-only bank. Check out the types of accounts each offers and choose one that works best for your needs.

2. Apply (In-Person or Online)

If you want to speak to someone face to face about your account options, head to the local branch of the bank you chose. Otherwise, most banks have the option to open new accounts online.

3. Submit Documents

Most banks require you to submit proof of address and multiple forms of identification before signing on the dotted line.

4. Deposit Money & Manage Account

Now it’s time to deposit any money you want to hold in the account. Next, you can set up recurring payments, have your paycheque automatically deposited, and track your spending.

Additional Reading

No Bank Account Loan 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, there are certain lenders who 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 bad option.

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.

Final Thoughts

A no bank verification or no bank account loan is certainly an option that is available for you whenever you need quick cash to cover a pressing expense. However, you should be aware that these loans are expensive and may cause more harm than good. Take the time to consider your options before taking on any type of financial commitment, whether small or large.

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Lisa Rennie

Lisa has been working as a 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. She's used a variety of financial tools over the years and is currently growing her money with Wealthsimple, while stashing some capital in a liquid high-interest savings account so that she always has a financial cushion to fall back on. She's also been avidly using her Aeroplan TD credit card to collect as many Aeroplan points as possible to put towards her travels!