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Same Day Loans? Yeah Right.
Loans Canada: The Country's Best Loan Comparison Platform
It’s important to prepare for financial emergencies. When a big cost comes up, it’s also great to have credit available. That’s why many lenders offer “same-day” loans, which are sums of liquid money that you can borrow on the day you apply.
However, are same-day loans truly helpful or are they a ploy to scam unsuspecting borrowers? Keep reading to find out.
Don’t know if you’re being scammed? Here’s how to spot a loan scam.
Typical Same-Day Loan Advertisements
You can see same-day loan advertisements in most parts of Canada. The block lettering spelling out “same day” and “instant” approval implies that you’ll receive your funds that day, which isn’t always true. To actually get your loan within 24 hours, you have to apply by a certain time and meet all the lender’s approval criteria.
In reality, if you don’t meet the requirements, you may have to wait until the next business day to get funded, maybe longer depending on your bank and how you receive the money.
While you might get a real loan, it won’t be as fast as promised in the advertisement. Beware of online ads or signage that declares “Approval in Minutes!” and “Get Cash as Soon as Today!”, the lender is purposely being vague about their products.
Learn more on how lenders mislead Canadians with advertisements.
Process of Getting a Same-Day Loan
Although it’s not always possible to get funded within 24 hours, there are many lenders who can provide you with a same-day loan. Here’s how to get approved:
Find a Lender
Choose a lender offering “same day funding”, not “same day approval”. Also, do research to confirm that your lender is a legitimate business. Remember, loan advertisements are tricky and people who are desperate for cash make ideal targets for scammers.
Check out how to compare lenders and loans.
Once you find a trustworthy lender, fill out your application. Don’t forget, every lender’s approval requirements are different. Some personal and financial details that you’ll have to provide include your:
- Date of Birth
- Permanent Address
- Social Insurance Number (SIN)
- Monthly Income
Provide All Documentation
To qualify for a same-day loan, you must be over the age of majority in your province/territory (18 – 19+), have a sufficient income and be a permanent Canadian resident. You may have to sign other paperwork after approval as well. Documents that most lenders request or examine include:
- Government Photo ID (passport, driver’s licence, etc.)
- Latest bank statements (proof of income)
- A recent utility bill (proof of address)
- A pre-authorized debit form or VOID cheque (for funding/payments)
- Credit report, history & score (from Equifax and/or TransUnion)
Once your information and same-day loan are approved, you should receive the funds via direct deposit within a few minutes or hours. If you apply in person, some lenders can give you cash or a cheque too. You can then spend the money with your debit card or withdraw it from a bank terminal or ATM.
Dangers of Same Day Funding
There are many types of same-day loans in Canada. For instance, payday loans range from $100 to $1,500 and have easy approval requirements. Auto title loans allow you to leverage your car in exchange for funding. These loans are particularly appealing to borrowers with bad credit and weak finances.
That said, there are significant financial risks associated with certain same day loans, making them expensive and dangerous:
- High/Predatory Costs – Since you may need cash immediately or have trouble getting approved due to poor finances, many same-day lenders will use those excuses to charge you higher than average interest rates and fees.
- Loss of Collateral – If you apply for a secured loan (car title loan, etc.), your funds are secured against the asset that you provided for collateral. If you default, the lender is allowed to seize your asset as payment.
- Short Terms – Same-day loans also come with short repayment periods. For example, payday loans have terms of only 14 days. High rates and fees, coupled with unaffordable terms can put you in an unending cycle of debt.
- Scamming & Fraud – If you’re desperate for funding, it’s easy to fall for a scam, which can lead to stolen identity and a compromised bank or credit card account. Never accept an offer that looks too good to be true!
Applying For a Same Day Loan?
Then remember to do a lot of prior research and make sure you’re getting an affordable deal. While same-day loans can be real, their high costs make them risky for your finances and credit.
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