Sometimes whatever you have in your bank account isn’t enough to cover a large or pressing expense. The good news is that there are plenty of financial sources available if you need a little extra financial assistance. From traditional bank loans and credit lines to more flexible online loans, there are multiple ways to access funds based on your financial needs.
Here we’ll explore some of the best ways to borrow money in Canada.
Best Borrowing Options For Canadians
Several borrowing options are available to Canadians. The one you choose depends on your financial situation and specific financial needs. Here are a few options to consider:
| Borrowing Option | Best For |
| Personal Loan From A Bank | – Larger loan amounts – Good credit borrowers with a good income – Have time to wait for approval |
| Personal Loan From An Alternative Lender | – Bad credit borrowers with low income – Little time to wait for approval and funding |
| Credit Card | – Small, short-term borrowing – Balance can be fully repaid within the month |
| Line Of Credit | – Access to funds for an extended period of time |
| Home Equity Loan | – Homeowners with sufficient equity in their homes |
| Payday Loan | – True emergencies Loan can be repaid in full quickly |
Where Can I Borrow Money Right Now?
Different loan options have different funding times. While some loan programs may take a while before your funds are available, others can provide funding almost immediately. If you need cash right now, consider one of these options:
Bree
Bree is an online financial platform that offers short-term cash advances of up to $350. You can use the funds to cover pressing expenses or to tie things over financially until your next paycheque. There’s no interest charged, no late fees, and the funds can be available shortly after applying.
| How fast can you get the money? Within minutes of applying. |
Nyble
Nyble is an online financial service that offers a no-interest line of credit designed to help consumers build credit. After approval, you can access up to $250 in credit.
| How fast can you get the money? Within minutes after approval. |
KOHO Cover
KOHO Cover provides interest-free cash advances of up to $250 to help cover last-minute expenses when needed. It’s a more affordable alternative to payday loans, with no credit checks required and the flexibility to repay the funds at any time.
| How fast can you get the money? Instantly through the KOHO app or online. |
Credit Card
If you have a credit card, you can access cash from your account. To do this, simply use your credit card like a debit card at an ATM with your PIN. Just keep in mind that credit card cash advances come with higher interest rates than purchase rates.
| How fast can you get the money? Instantly from a bank machine. |
Learn more: What Is A Credit Card Cash Advance?
Overdraft Protection
Overdraft protection is a bank service that allows transactions to go through even if your account balance is insufficient. If you require a small amount of extra money but don’t have enough funds in your bank account to cover this need, overdraft protection will cover you, but it typically comes with fees.
| How fast can you get the money? Instantly from a bank machine or online banking. |
Personal Loan From Online Lenders
A personal loan from online lenders is a type of unsecured loan that you can apply for entirely online. These loans generally provide quick approval and funding. You can even apply with bad credit if you’re turned down by the bank.
| How fast can you get the money? Generally speaking, funds are available within 24 hours after approval, or even the same day as you apply. |
Payday Loan
A payday loan is a short-term, high-interest loan that provides quick cash. Repayment is typically required by the borrower’s next payday. These loans are often used for emergency expenses, but they come with extremely high interest rates, making them an expensive borrowing option.
| How fast can you get the money? Typically, funds from a payday loan are available within a few hours to one business day after approval, though some in-person payday lenders offer instant funding. |
Best Way To Borrow Money In Canada If You’re A Homeowner
If you’re a homeowner with equity in your home and are not in a rush for the money, perhaps a better way to borrow money is to access your home equity. You can do this with the following financing programs:
- Home Equity Loans
- Home Equity Lines Of Credit (HELOCs)
Both of these loan programs involve borrowing against the equity in your home. The differences between the two are as follows:
| Home Equity Loan | HELOC | |
| Loan Structure | – Lump sum is provided upfront | – Revolving line of credit up to a specific limit |
| Interest | – Usually a fixed rate – Interest charged on the entire loan amount | – Usually a variable rate – Interest only charged on the amount withdrawn |
| Loan Repayment | – Repayments are made in regular installments that include both principal and interest | Typically has two phases: – Draw period where only interest is paid – Repayment period where you repay back both principal and interest |
Benefits Of Using Home Equity To Borrow Money
There are several perks to using a home equity loan or HELOC to borrow money:
- Lower Interest Rates: Home equity loans and HELOCs typically come with lower interest rates compared to other financial products, like personal loans and credit cards. This makes loans tied to your home equity more affordable.
- Larger Loan Amounts: Depending on how much equity you have in your home, you can borrow significant amounts. This can be useful for larger expenses, such as home renovations.
- Flexible Repayments: HELOCs allow you to withdraw as much or as little as you like at any time, making this a very flexible means of borrowing money. While home equity loans may not offer this type of flexibility, they can come with repayment terms that are customized to your specific needs.
| Warning: Since your home is used as collateral, failing to make payments on your loan can put your home at risk of being repossessed by the lender. Only apply for a home equity loan or HELOC if you’re certain that you can make repayments. |
What Do You Need To Get A Loan Now?
The requirements for a loan from a bank and online lender are roughly the same, though the minimum requirements for each factor may have slight differences:
- Proof Of Identity: A valid government-issued ID, such as a passport or driver’s license, is a typical loan requirement from both banks and online lenders.
- Proof Of Income: You’ll need to show the lender that you can cover your loan payments. As such, you may be asked for proof of income from both banks and online lenders, such as pay stubs, bank statements, and tax returns.
- Proof Of Residency: Utility bills or rent agreements are standard documents that you may be asked for to prove your residency.
- Credit Check: Banks typically perform a credit check to verify your creditworthiness and will expect good credit to approve you for a loan. Online lenders, on the other hand, tend to have more relaxed credit requirements. So, if you have bad credit or no credit history, you may have better luck with an online lender.
- Collateral: If you’re applying for a secured loan, you may need to use a valuable asset like your home or car to back the loan. Unsecured loans do not require collateral.
- Debt-To-Income Ratio: Both banks and online lenders may assess your existing debts compared to your income, though the requirements from online lenders may not be as strict.
| Note: Online lenders often use instant bank verification, which quickly and securely allows lenders to verify a user’s bank account details in real-time. This can both reduce the risk of fraud and help move the loan approval process along faster. |
Bottom Line
Understanding the best ways to borrow money in Canada is helpful in times when a little financial help is needed. There are plenty of resources available, including banks and alternative lenders, depending on your needs and financial situation. Be sure to compare interest rates, repayment terms, and eligibility requirements before applying for a loan to ensure you choose the right option for you.
