Monthly bills can sometimes feel like a huge financial burden. They need to be paid in full and on time every single month or else you could face serious financial and legal consequences. Rent can be particularly hard to cover given it’s one of the biggest monthly expenses Canadians renters pay. While skipping a rent payment to cover other bills and debts may seem tempting, it can cause your landlord to evict you. Similarly, if you’re dealing with a financial emergency and need extra cash to cover your rent, there are a few options for you to choose from, including rent loans.
Best Loan Options To Cover Rent And Utilities
When it comes to paying for your rent, utilities, and other necessary bills, you have several options to choose from. Obviously, covering these costs with cash is the best option, but when life happens, it’s nice to know that you have alternatives.
Rent Loans: Personal Loans
An installment loan is a standard credit product that almost every lender offers. It allows you to borrow a specific amount of money, which would be deposited directly into your bank account following approval. Over time, you would repay this borrowed sum through a series of payments with interest.
This is a great option for renters who have a steady income but are unable to afford their rent due to unexpected expenses.
Rent Loans: Vehicle Title Loan For Rent
Like an installment loan, a vehicle title loan involves a sum of money that you can borrow from various lenders in Canada, only this time your vehicle (an asset) is used as collateral to secure it, often leading to more money and quick approvals. The lender will claim temporary possession over the vehicle’s title until the loan is paid in full.
This form of financing is a good option for renters who have poor credit, bankruptcies and other negative remarks on their credit report but need the money urgently to cover rent.
Line of Credit For Rent
Similar to a credit card, this involves a specific amount of revolving credit that you can withdraw from whenever you need it. Unlike an installment loan, it is an open-ended loan. Meaning there is no set schedule on when you have to repay the amount you borrow. Moreover, you only have to pay the interest accrued each month, until you’re ready to repay the amount you owe.
This can be a good option for someone who temporarily needs help with their rent and utilities.
4 Step Process To Get A Loan For Rent
How To Apply For Rent Loans?
Find A Lender
Before applying with any one lender, get pre-approved by filling in their application. Most lenders offer a quick application to see if you pre-qualify. This will allow you to compare lenders and see who offers the best loan option.
Get Pre-Approved With Multiple Lenders
Comparing lenders before applying is one of the best strategic moves you can use to get the best rate for you. Many lenders offer free loan quotes, which you can use to compare different loan offers. This can potentially save you hundreds of dollars in interest.
Complete Application
Once you know who you want to apply with, simply complete the application. You’ll usually need to provide proof of identity and proof of income. This includes documents such as your driver’s license or passport for your identity and your bank statements or paystubs for proof of income.
Get Funded
After submitting your application, all you have to do is wait for your approval. Depending on your lender’s underwriting process, this can take as little as a few hours to a few days. After that, your funds should be transferred to your bank account within 24 hours.
Learn more on how to apply for a loan.
Alternative Ways To Pay For Rent
Friends and Family
If you’d prefer to avoid applying or have trouble qualifying for credit products, it might be a better idea to ask for a bit of help from the people you trust. Although borrowing from friends or family is not always the easiest thing to do, it may be the cheapest and least complicated option for paying your rent or utilities.
Credit Card Cash Advance For Rent
While credit card cash advances have very high-interest rates, they can be a better option than a payday loan. This can be a good option for those who do not have the credit or income to get an installment loan and who have landlords that do not accept credit card payments.
Can You Use A Payday Loan To Cover Rent And Utilities?
Like a regular loan, this would be a lump sum of liquid money that’s deposited directly into your bank account. However, unlike a regular installment loan, they come with extremely high APRs that can reach between 300% to 600%. Moreover, it has very short terms, usually between 15 to 30 days.
Moreover, you can usually only borrow $100 – $1,500. Very minimal paperwork is required for approval, so borrowers with bad credit, low income, and debt-related problems will find it easier to qualify. Lastly, the process does not involve a credit check, no security will be necessary, and the funds can be transferred in as little as 1 – 2 business days.
Additional Factors To Beware
- Most payday loans come with extremely high interest rates, the price of which will vary from province to province ($15 – $25 per $100 you borrow).
- Repayment dates are only 14-days after the funds have been deposited, which can quickly lead to uncontrollable debt.
- Many lenders will automatically withdraw the full loan cost from your bank account when it’s due and a penalty will apply for non-sufficient funds.
- Some provinces allow ‘rollovers’, meaning you can borrow a second loan before your first is paid (this can also result in severe debt).
- Predatory rates, scamming, and identity theft is all possible dangers, as payday lenders are harder for the provincial and federal governments to regulate.
Cost Of Using A Payday Loan For Rent
| ON, AB, BC, NB and P.E.I | $15 per $100 borrowed |
| MB and SK | $17 per $100 borrowed |
| NS | $19 per $100 borrowed |
| NL | $21 per $100 borrowed |
| QC | 35% (AIR) |
| YT, NU, and NT | $60 per $100 borrowed |
Essentially, taking out a payday loan is only a good idea when you’ve got very unhealthy finances and exhausted every other option for paying your rent and utility bills. Only apply for a payday loan if you’re absolutely sure that you can afford all the associated costs by the end of your 14-day term.
How To Compare The Best Rent Loans
Although there are several options you can choose from when financing your rent cheques and utility bills, not all of them are the best choice for your particular financial situation. So, it’s a good idea to research and compare your options carefully before you actually apply yourself to any of them.
As you do that, be sure to take the following factors into consideration:
How much money do you actually need?
While you may need enough financing to cover both your rent and utilities, it’s not smart to apply for more credit than you can comfortably afford to pay back.
Is this a one-time requirement or do you often have trouble paying bills?
As beneficial as some credit products can be, relying solely on them to cover your rent and utilities can force you to rapidly accumulate debt.
What financial issues are preventing you from paying your bills?
Depending on how bad your situation is, you may just need to take simple precautions, such as saving more income, formulating a proper budget or cutting back on unnecessary expenses.
What interest rates are you being offered?
The interest rate you pay will vary from lender to lender and can definitely drive up the price of your credit product. Before applying, it’s essential to ask your lender what rate they are willing to offer you, then factor it into your budget to see if you can afford it when it’s combined with your regular payments. That said, the healthier your finances and credit are, the more affordable your interest rate will be.
Is your credit score high enough to get approved for an affordable loan/product?
A credit check may be part of your lender’s approval process. Keeping your credit score within the good range (660 – 900) is one of the best ways to secure a large amount of credit, a low interest rate, and a more adjustable repayment plan.
Will an extra set of monthly payments increase your financial strain?
Remember, a credit product that’s beyond your budget can result in unwanted stress if you cannot afford the associated costs, along with all your other regular expenses. If your interest rate ends up being too high or your repayment plan too long, it might be safer to look for another solution.
Are you able to find a reputable lender to work with?
Prior research is critical when selecting a lender, as there are many predatory organizations and scam artists in Canada who want to take advantage of your need for credit. Before you give them any personal or financial information, make sure your lender:
- Is listed in the Better Business Bureau database
- Has a valid provincial business license and address
- Charges interest rates that are below the provincial limit
- Displays all their product costs through advertising and contracts
- Does not charge any fees prior to depositing your approved funds
- Does not claim to have a 100% approval rate
What Should You Do If You’re Having Trouble Paying Rent?
Dealing with various types of consumer and household debt can be an expensive, time-consuming ordeal. In fact, the inability to properly manage your debt could be the same reason that you’re finding it difficult to make rent or pay your utilities on time.
Since having both of those problems in your life can cause a lot of unwanted stress, it’s best to try and quickly consolidate as many of your outstanding debts as possible, whenever you have the opportunity. Don’t worry, because there are many debt management solutions in Canada that can give you that exact opportunity, such as:
Debt Consolidation Loans
This type of loan is meant specifically to reduce high-interest debt but functions in the same fashion as a regular installment loan. The overall goal would be to use it to pay down multiple debts in one go, thereby leaving you with a single monthly repayment plan and interest rate to keep track of.
Debt Management Programs
This involves a similar process and final result as the loan type above. However, for this option, you’ll need to work with a trained professional. Here, a credit counsellor would negotiate a deal with your creditors that helps you consolidate your debts using monthly payments, which may be preferable because you won’t have to take out a loan and you’ll receive professional advice along the way.
Additional Reading
Rent Loans FAQs
Can I use a loan to help me from being evicted?
Can I pay rent using a credit card?
What are my rights as a tenant?
Need Help Cover The Cost of Your Rent and Utilities?
A loan from one of our many flexible lenders will allow you to pay your rent and your monthly utility bill on time so that you won’t have to pay any extra fees. Loans Canada offers easy and affordable installment plans and great customer service. We want you to regain control of your finances and we will be there every step of the way to help you.
