Every day, Canadians all across the country deal with financial emergencies: their cars break down, they have to take expensive last-minute trips to deal with family crises, and they lose their jobs. All of these debts and expenses can be financially straining, leading to the need for immediate cash.
That’s when a payday loan may seem like an extremely convenient way to borrow a small amount of money as quickly as possible.
What Is A Payday Loan?
A payday loan is a small, high-cost, short-term loan in Canada. Depending on the lender you borrow from, you’ll be able to borrow as little as $100 to as high as $1,500. Like its name “payday”, repayment is due on the borrower’s next payday, which is typically between 14 to 30 days after receiving the loan.
Moreover, payday loans are very easy to qualify for, you simply need a stable source of income and an active bank account. No credit checks are required, making it ideal for those with poor credit. However, while convenient, they do have extremely high interest rates and fees, making them a very costly option. Generally, payday loans should only be relied on as a last resort.
Cost Of Payday Loans
Payday loans are notorious for their high interest rates and exuberant fees. Most provinces charge $14 per $100 borrowed, while in Quebec, you can pay 35% AIR.
Where Can You Get An Online Payday Loan In Canada?
Magical Credit is an online lender that offers two types of loan products; Magical Cash Loans and Magical Installment Loans. Borrowers can access up to $1,500 with the Magical Cash Loan and up to $20,000 with the Magical Installment Loan. Magical Credit specializes in bad credit loans, so qualifying with them may be easier compared to traditional banks. Moreover, they accept various government subsidies as income for their Magical Cash Loan, providing greater accessibility to those in need.
Available in seven provinces, iCash is an online source of fast, small loans that can be used for any emergency. Approved applications are processed within the same day and no documentation is required before the transfer of your funds. You can borrow up to $1,500 with iCash. Every time you pay the loan back following the agreed-upon deadline, you become a more reputable borrower. The increased trust allows you to borrow more each time. iCash uses a Trust Rating System, an algorithmic function that determines your merit as a borrower.
AimFinance is a financial service that provides small personal loans up to $1,000 to borrowers in Ontario and BC. The online application process is quick and easy, and funding is provided in as little as 24 hours. Loan terms range from 9 to 24 months, with interest rates ranging from 29% to 35%. AimFinance focuses on helping bad credit borrowers access credit without the need to undergo a credit check. So, if you have bad credit, you’re still eligible to apply.
GoLoans is a Canadian financial services company that offers online installment loans. The online application process can be completed in a few minutes, with funding available in as little as 2 hours or less after approval. GoLoans does not require credit checks and aims to help borrowers build their credit scores with timely payments. Repayment terms are flexible and range from 91 to 120 days or longer, depending on your needs. This flexibility makes GoLoans a convenient financial solution when you need fast cash and easy repayment terms.
LoanMeNow offers Canadian consumers quick access to the cash they need. They offer loans up to $1,000 with no credit check required. Funds are deposited directly into your bank account within as little as 24 hours. A short-term loan from LoansMeNow can help you cover the cost of an unexpected expense or tide you over until your next paycheque. Whatever your financial needs are, LoanMeNow’s quick approval time means you’ll be able to get back on track as soon as possible.
Venue Financial is a financial services company that offers short-term lending solutions online and in person to consumers in British Columbia (BC). The application and approval process is quick and easy, with funding available via e-transfer shortly after approval. All income types are accepted, and flexible repayment terms make repayments manageable for borrowers. No credit check is required, making Venue Financial a suitable option for bad credit borrowers or those with no credit history.
Cash Money has been helping Canadians access easy and quick loans for more than 30 years. They offer payday loans, personal loans, and line of credit loans from $1,500 to $10,000. User will enjoy their simple online application, personalized options, and same-day funding. Whether you need to cover an emergency expense or simply need to make it to your next payday, Cash Money can a variety of options to meet your needs.
Cashco Financial is a Canadian financial services company that offers short- and long-term loan options. Payday loans for up to $1,500 are available with no credit checks and instant approvals. Flex loans are available for up to $7,000 with loan terms of up to 60 months and flexible repayment options. Cashco is known for providing same-day funding, ensuring you have access to the money you need quickly.
Captain Cash specializes in providing quick online cash loans to consumers of all credit types. You can get up to $750 and repay your loan over a term as long as 3 months or more. Same-day approvals are available when you apply during business hours and funds are sent via email money transfer. If you have bad credit, you’re still encouraged to apply, as no credit check is required.
GoDay is an online payday loan lender that offers small, short-term loans up to $1,500. The application process is very quick and can be completed in as little as 5 minutes. You'll receive an instant decision once you submit your application, and funding can be accessible in as little as 1 hour. Their goal is to help Canadians in need of short-term financing access quick funds to cover last-minute expenses without the hurdles that typically come with traditional lending.
Cash4You is a financial services company that offers payday loans and installment loans. Payday loans are available for up to $1,500, and installment loans are available for up to $15,000. Cash4You provides an easy and efficient application process, which can be done either online or in-store. Loan applications can be approved very quickly and funding provided shortly after. Cash4You caters to consumers with varying credit scores, so bad credit borrowers may apply.
My Canada Payday is a licensed payday lender specializing in short-term loans with fast approval and no credit checks, making them an ideal option for bad credit borrowers with urgent financial needs. Loans are available from $100 to $1,500, with funds available via e-transfer in as little as 15 minutes after approval.
Speedy Cash is a financial services company in Canada that provides payday loans both online and in person. Loan amounts are available from $200 to $1,500, based on income. The application and approval process is straightforward, and no credit check is required. Once approved, you can receive the funds as quickly as 30 minutes later via e-transfer.
Loan Express is an online lender that provides payday loans up to $1,500 with high approval rates and e-transfers available in as little as 2 minutes. Loan Express specializes in making small loans accessible to consumers with various credit backgrounds, including those with bad credit. If you're not employed and are collecting a pension or government benefits, you may still be eligible for a small, short-term payday loan from Loan Express. The simple and straightforward online application process makes Loan Express a viable option for those who need immediate financial relief.
The payday loan cycle is one of the worst financial situations to be in. You are pulled into the cycle when you can’t afford to pay back your first payday loan. This happens because payday loans need to be paid back by your next paycheque. Let’s say you take out a $500 payday loan today because you have no money and only get paid next Friday. But on the following Friday, the payday loan company takes back their $500 plus interest and now you have no money again and you need to pay rent and buy groceries. This is where the cycle starts because now you need to take out another payday loan to pay rent and buy groceries.
Can You Get A Payday Loan With Bad Credit?
Most payday loan companies do not run a credit check when they review a loan application. This means that having bad credit will not affect your chances of being approved for a payday loan in most cases. With a payday loan, you are limited to how much money you can borrow, however. Most payday loan companies will offer you approximately $100 to $1,500, depending upon many different requirements that you must follow. In many cases, you will have the money in your hand within an hour if you qualify.
Pros And Cons Of Payday Loans In Canada
Like any other credit product, there are both positives and negatives to payday loans. Depending on your financial situation and need, a payday loan can be a good or bad option.
Payday Loan Pros
Online Payday Loans – There are hundreds if not thousands of online payday lenders in Canada. You can apply and get funded without having to step outside your home. Similalry, if you prefer applying in-person, you can find many local payday lenders near you.
E-Transfer Payday Loans – Many payday lenders will fund you the money via e-transfer for extra fast funding.
Weekend Payday Loans – There are many payday lenders who operate during the weekends. If you need cash on a Saturday or Sunday, it’s possible through various payday lenders.
No Credit Checks – One of the main appeals of payday loans is they have no credit checks. Many Payday lenders accept Canadians who have bad credit or have previously gone through a bankruptcy or consumer proposal.
Cooling Off Period – In Canada there are numerous laws and regulations to protect consumers from predatory lending practices. Generally, you’ll have 1-2 days to cancel the payday loan without penalty, if you decide against using it.
Payday Loan Cons
Payday Loan Cycle – One of the dangers of payday loans is the payday loan cycle. Many Canadians get trapped into the payday loan cycle because they are unable to repay their first loan.
High Cost – As mentioned before, payday loans have extremely high interest rates and fees. These costs can quickly add up, making it unaffordable.
Predatory Lenders – The payday lending industry is littered with predatory lenders and scammers who prey on borrowers with limited resources and options.
There are many payday laws and regulations placed to protect the borrower from unethical lending practices.
Cooling Off Period – This is a law that allows you to change your mind about using a payday loan, without any penalty.
Loan Rollovers – Extending or renewing a payday loan is not allowed in most provinces.
NSF Fee – If you’re unable to pay your loan, there’s usually a $20 fee added to your loan.
Note: Payday loans are extremely expensive and can lead to a cycle of debt if you’re unable to repay the full amount borrowed. To Learn about the payday loan laws in your province, click here.
What Factors Should You Consider Before Applying For A Payday Loan
Before you decide to apply for a payday loan, it is important that you consider the following six factors. These will help you determine if a payday loan is the right option for you.
Your Current Financial Situation – Are you currently struggling to make ends meet? Do you already have a significant amount of debt that you struggle to keep up with? Unfortunately, while a payday loan may seem like a great solution, they usually only increase financial hardship.
Available Alternatives – Are there any alternative options available to you? Can you borrow money from a friend or family member? Can you apply for a more affordable installment loan instead?
The Two Week Term – Payday loans must be repaid when you receive your next paycheque, typically within two weeks. Will you have the money to repay the loan, plus interest, in two weeks.
Amount Borrowed – Is the amount you’re able to borrow enough to actually help with your financial issues? Or, will it only add to your debt levels and make dealing with necessary expenses even more difficult?
Interest Rate – Before signing on the dotted line, ask about the APR associated with the payday loan. Typically, payday lenders only advertise the two-week fee. Payday loan APRs are often 400% or more.
Penalties & Fees – What are the additional fees associated with taking out a payday loan? Are there excessive or even illegal administrative fees? Will you be significantly penalized for making a late payment?
When Is A Payday Loan A Good Option?
While our number one recommendation is for Canadian consumers to avoid payday loans if possible, we understand that they are certain situations where taking on a payday loan is the only option.
Emergency Situations – Emergency situations where additional money is needed as soon as possible, a payday loan could be the best choice simply because of its quick approval times.
You Know You Can Pay It Off – If you could guarantee that you would be able to repay the loan by your next paycheque, then choosing a payday loan to cover an important expense can be a good choice.
You Have No Alternatives – If you’ve exhausted all other alternative options and are struggling to get a loan due to bad credit and negative remarks like a previous bankruptcy and debt settlement, then a payday loan can be a good option.
Alternatives To Payday Loans
If you’ve been thinking about taking out a payday loan or if ever in the future you need access to money quickly, please consider any of the following options before you decide to take out a payday loan.
The idea of a payday loan can be very appealing especially if your current financial situation isn’t so great. But what payday loan providers don’t advertise is that once you take out one loan you can be sucked into a cycle that will completely ruin your finances. Small personal loans, on the other hand, are just as simple and quick as payday loans but they come with significantly fewer problems.
Interest rates associated with small personal loans are significantly less than those of a payday loan. Moreover, personal loans come with installment payment plans where you’re able to pay off the loan with small affordable payments over an extended period of time, unlike payday loans where the full balance needs to be paid back in one payment.
Generally, an installment loan is a better choice as it means you won’t be bogged down with the stress of making one huge payment but instead, you’ll have a longer payment period and make smaller payments.
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Payday Loans FAQs
Why are payday loans so expensive?
Payday loans are expensive because the full amount borrowed must be repaid within 2 weeks and they typically have APRs of 500% or more.
What do I need to get approved for a payday loan?
One of the main reasons why payday loans are so popular is because of how easy it is to get approved. Applicants need to be the age of majority in their province, have a permanent address, a bank account, and a steady income.
What happens if I can’t pay back a payday loan?
As with any type of loan, if you fail to pay back your payday loan, typically you will be charged a late fee and may even have your account sent to collections.
Are payday loans bad?
Payday loans are one of the most expensive forms of financing, they are designed to trap you in the payday loan cycle of debt. Because the full amount must be repaid in 2 weeks, most borrowers who are already struggling financially, won’t have the money necessary to do so. This can lead to more debt, credit score problems, and ultimately a cycle of debt that is next to impossible to get out of.
How To Apply For A Payday Loan?
Applying for and getting approved for a payday loan is a very simple process. All you need to do is request a loan from a payday lender, either in person or online, have a bank account, be at least 18 years old, and be employed or have some form of guaranteed income. Have all that and you’re basically guaranteed a loan.
Looking for An Alternative to Payday Loans?
If you’re interested in more information about the loan options available to Canadians looking to stay away from the payday loan cycle, Loans Canada can help.
Get expert tips and guidance from a community of renown personal finance experts right here at Loans Canada. We're here to help you stay informed so you can make the best financial decisions.
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