Payday Loans

Easy Approval, No Credit Requirements

Most payday loans are accessible to anyone over the age of 18 with consistent, verifiable income.

Unlike traditional loans that require collateral or a credit check, these loans are based solely on the cash flows and expected pay of the borrower. Even loans for bad credit profiles if you have bad credit, it doesn’t matter – your credit is simply not taken into account. 27% of payday loan borrowers have been denied approval by a bank or credit union.

Spending Flexibility

Many conventional retail loans are offered for a specific purpose, defined from the outset. An auto loan can only be used to purchase an automobile, and a mortgage can only be used to finance a residential or commercial property.

Cash from payday loans, however, can be spent on anything – any discretionary or staple expense deemed fit by the borrower. You can borrow money for any reason, and do not have to prove you need the financial assistance.

Easy Access

Online payday loans are available to anyone with an internet connection. All processes and procedures can be completed online, making them very accessible.

This doesn’t mean you have to apply online though; many lenders have brick-and-mortar stores in convenient locations, so you can apply in store instead if you prefer. But you have the option to do either.

Achieve your goals even without a credit history by applying for a no credit check loan. Unlock the opportunities you deserve with financial support tailored to your unique situation.

Potential Risks of Payday Loans

As with any form of loan, there are downsides to borrowing money via a payday loan. These include:

Interest Charges

Depending on the duration that the loan is obtained for and the interest rate charged by the lender, payday loans can be an expensive form of financing compared to other short-term loans and/or credit cards. The image below illustrates this concept. Assuming $500 borrowed for 2 weeks, interest payments are as follows:

Payday loans are intended for short term use; it is crucial to know that if a payday loan is held for longer than intended, it can quickly become extremely expensive, contributing to financial difficulties and making it impossible to repay the loan in full.

This is one of the primary criticisms of payday loans: they can make a difficult financial situation worse via quickly escalating interest charges, which in the end means the customer has to borrow even more money to repay the payday loan.

A Debt Trap

As mentioned above, borrowers can find themselves in a cycle of debt, where each pay cheque goes towards the repayment of existing loans, leaving little for the operating expenses they took out the loan for. As a consequence, extensions of these loans mean even more interest and even more debt, making it even harder to pay back what you’ve borrowed. This is known as a debt trap, and it is an especially high risk for those who need emergency cash, whatever the cost.

Predatory Practices

Non-sophisticated borrowers may be susceptible to lending practices that are intended to be unfavourable to the borrower; there may be contract loopholes or misleading marketing materials to contend with. There may even be hidden fees that make online payday loans even more expensive. It is therefore critical for consumers to find registered institutions that are fully licensed and vetted by regulatory authorities.

To learn more about criminal rates of interest in Canada, please visit the Government of Canada website.

What To Consider Before Getting an Online Payday Loan

Before you get a payday loan, the following should be defined and reviewed in detail:

Need

Before completing any loan application, it is important to understand your financial needs, and whether they justify the higher interest payments that come with a payday loan.

For debts that can be negotiated, it may be worthwhile to speak to the creditors directly to restructure the outstanding amounts and/or develop a specialized repayment plan, if that option is available.

Interest, Penalties and Other Fees

The unsecured nature of payday loans means that while the borrower can avoid asset seizure in the event of default, interest rates can become extravagantly high. This is even before penalties and other fees come into consideration. It is therefore important to read contract documents carefully to understand the consequences of missed/late payments, and to be really sure you’ll be able to repay the loan.

Loan Term

The length of the loan is a major consideration. If the borrower is in immediate need of cash and payday is still a few weeks away, a payday loan is a better option than for someone whose payday is a few days away and/or does not have immediate cash needs.

Remember to take the loan term into account when calculating the overall cost of a loan – regardless of how much you borrow or where you source funds from. The amount you repay over the life of the loan depends on both the interest rate and the loan term.

Principal Amount

The amount of cash being borrowed should be studied closely prior to receiving funds, as each incremental dollar yields a higher interest payment. In a facility such as a payday loan, this gets magnified due to the significantly higher interest rate charged. Borrow only what you need.

Alternatives

It may be a good idea to consider if any of the other loans in Canada that are available to consumers may better suit your needs; for example, bad credit borrowers can access other types of short term loan, and many of these lenders have an online application form. Or, if time is of the essence, other lenders have hassle free online application processes that allow borrowers to access cash very quickly – some even providing direct deposit of borrowed funds within a day.

As loans in Canada, of all types, have become more popular, and online lending has surged, pretty much any type of loan you can think of is available online, and lenders of all kinds – including banks, credit unions, credit card companies and alternative lenders – have multiple options that make getting a loan much easier than you might think.

All of this is to say, remember to always compare the cost of borrowing across loan types, before deciding upon a final option. Fast cash may be attractive, but don’t overlook the long term cost.

Comparing the Cost of Online Payday Loans and Cash Advances

The most comparable alternative to a payday loan, wherein borrowers acquire short term cash to assist with immediate expenses, is known as a cash advance. This can be a little confusing, as some people call payday loans “cash advances” and the two terms are often considered synonymous. But in fact, they are subtly different.

There are two types of cash advances:

Type I Cash Advance

This is basically the same as a payday loan; the lender provides a fixed loan amount that is tied to the borrower’s income and is intended to be repaid on the borrower’s next payday. As mentioned above, bad credit, other loans in Canada, and other factors are not taken into account.

Type II Cash Advance

A type II cash advance is structured as a line of credit, where the cash advance offered is dependent on the unused credit limit on the borrower’s credit card, rather than on income. This type of cash advance is provided directly by the credit card company (not the issuer), and receives the same type of treatment as any other ordinary purchase made with a credit card.

When speaking colloquially, most people refer to type I cash advances as payday loans, and type II cash advances as a credit card transaction.

Which Is Better: Payday Loan or Cash Advance?

Depending on the borrower’s financial situation and credit card features, it may or may not be advantageous to use a credit card cash advance. Some key factors for borrowers to consider if choosing between these two options are: current credit rating, and credit card contract terms. In some cases, credit card companies charge higher rates on cash advances than on ordinary credit purchases, so it is important for the borrower to understand the rate differential, and choose accordingly.

If you have fair credit you may be eligible for a personal loan instead. They offer better rates and have pretty flexible requirements.

Statistics from Government of Canada

Cost-Effective Alternatives to a Payday Loan or Cash Advance

There are many ways to access cash online, and many options have competitive interest rates and terms, so it’s smart to educate yourself about all of your options before choosing to go with a payday loan. Research by the Government of Canada found that 57% of payday loan users were aware of their high costs versus their alternatives.

Online Options

A major reason many turn to payday loans is that they are unable to access cash by any other means; 65% of payday loan borrowers in Canada do not have access to a credit card. But if this is you, you should know that there are many financing options available to those who have been turned away by a bank or credit union.

Online lenders offer loans and credit products to new Canadians, those with bad credit, and those who don’t qualify for more traditional financing. Many of these lenders are accessible from this website, and you may be able to qualify for their products online and at a lower interest rate than with a payday lender. Many of these alternative lenders have excellent customer service and allow you to apply online, and receive your funds via e transfer or direct deposit. In this way, they mimic much of the convenience of an online payday loan.

Borrowing vs. Using Savings

Finally, it’s worth noting that research has shown that even those with high income and savings turn to fast cash loans to cope with unexpected expenses. This is believed to be an education issue; people would rather keep savings accounts ring-fenced, and take on new debt in the form of a payday loan, than dip into rainy day funds.

However the math on this does not add up, as new debt costs more than using savings, and can potentially affect your credit rating and overall financial health too. The best advice states that it is better to use savings when encountering an unexpected expense, and then rebuild them slowly from your monthly pay, than it is to take on unnecessary debt.

Payday Loan Legal Requirements in Canada

As mentioned above, payday lenders in Canada are regulated and have to comply with specific requirements in order to operate. These requirements were created to protect Canadian consumers from predatory practices – especially important nowadays, when getting a loan online means you never have to speak to a financial specialist, and easy application forms mean you can request funds from a lender without ever having to verify their business practices.

The rules state that those who offer payday loans in Canada – including those who offer online payday loans across Canada – must adhere to the following:

Licensed & Registered

Every payday business must be licensed and registered with the Government of the province they operate in, as well as fully compliant with the rules of the Payday Loans Act, 2008. For those that offer online payday loans, this means remaining compliant with the rules across the country.

Transparent

Payday lenders must display specific information about their loans on the first page of the loan contract; this includes the loan amount, the number of days the loan is for, and the interest rate.

Repayment Rules

Payday lenders cannot ask for or accept payment by automatic pay cheque deduction.

However, customers can set up a direct deposit to repay their payday loan at their next payday, so they do not have to worry about going in store to repay, or worry about dealing with transferring money back to their online lender.

Borrowing Practices

Payday lenders cannot issue more than one loan at a time to a single borrower. However, customers can take out multiple online payday loans by applying to borrow funds from multiple lenders.

Cost of Loans

Payday lenders must display a poster and provide a flyer articulating the cost of a payday loan over time.

Payday Loan Borrower Rights in Canada

Payday loans are governed by the Payday Loans Act, 2008, which was initiated to protect borrowers and enshrine certain rights. Most pertinent amongst the Act’s tenets are the following points:

• Borrowers cannot be charged more than 15% interest on the loan amount
• Lenders cannot sell or offer to sell any incremental and/or additional goods and services along with a payday loan
• Lenders cannot provide a loan of more than a fixed percentage of pay cheque proceeds (the percentage varies between 30% to 50% across provinces)
• Insurance is optional on a payday loan
• Borrowers can cancel a payday loan contract within 2 business days of origination, without paying any penalty, fees, or providing a reason to the lender
• Payday loan debt cannot be rolled over into a new payday loan, as it is prohibited for a borrower to receive a second loan from the same lender before paying the first one

What Happens If You Fail To Repay a Payday Loan?

Just as the Payday Loan Act specifies how a lender must act when selling a payday loan to a customer (whether online or in store), it specifies how a lender cannot act if a customer fails to repay their borrowed funds.

Crucially, a failure to meet the terms of a payday loan agreement cannot result in the lender pursuing one or more of the following actions:

• Contacting the borrower more than 3 times a week (excluding regular mail) or on statutory holidays

• Contacting the borrower’s immediate or distance relatives, household members, friends, neighbours or acquaintances at any time

• Using excessive pressure or threatening language to coerce payment

• Processing a post-dated cheque or pre-authorized debit more than once if it means that the financial institution will charge additional fees, such as overdraft or insufficient funds fees

Payday Lending Regulation Variations by Province

Payday lending is regulated at both a federal and provincial level, and as such there are some geographical variations across Canada. For example, Nova Scotia has some of the laxest laws – with higher than average interest rates and fees. British Columbia has one of the lowest levels of interest and fees.

It may seem confusing, given that so many people choose to get a payday loan online, that different provinces have different rules. When you apply online, you may not notice this at all. However, you should know that every payday business must be fully licensed and registered in whichever province(s) it operates. If it offers financial services to customers online, that means that it needs to be fully licensed in each and every province it accepts customers from.

So for bigger companies that operate across Canada, that means their customers in Nova Scotia, say, will be subject to different rates and rules than their customers in British Columbia. And the lender itself must be compliant with the regulations in both provinces, and apply the relevant regulations to their customers accordingly.

Frequently Asked Questions About Online Payday Loans

Can I apply online for a payday loan?

Yes, most payday lenders have easy application processes that can be accessed entirely online. This means you never have to go in store – not even to collect your money. Once funds are approved, cash will be deposited into your bank account via a transfer. You can apply today and receive approval – and your funds – almost immediately!

What’s the difference between a payday loan and a cash advance?

Most people use the two terms synonymously, but a cash advance can actually refer to two different types of funds: those received via getting a loan from a payday lender, and those received by taking money out from your credit card. The latter does not need any approval, and you can ‘borrow’ as much money as you like, up until your credit limit.

What do I need to qualify for an online payday loan?

Borrowers must be at least the age of majority in their province, have a steady verifiable source of income, access to a bank account, and a permanent address.

What counts as income for a payday loan?

The income needed to be approved for a payday loan does not have to be employment income; any form of income counts, including benefits, pension, royalties, and so on. The key is that you’ll be able to repay the money you borrowed.

Can I get a payday loan with bad credit?

Yes. Payday loans are a very useful way to access cash for people that have bad credit and can’t get approval anywhere else. They are also intended for people who want to avoid a credit check, for any reason – even if they have perfect credit! Payday loans should however still be your last loan option, because they are expensive.

How quickly can I receive my payday loan?

Lenders typically approve payday loans within a day, and sometimes even within a few hours of submitting an application form. Cash is usually automatically deposited into your chequing account via a bank transfer. This makes a payday loan one of the fastest and most convenient ways to borrow money.

Do I need a bank account to get a payday loan?

Yes. You will need access to a bank account, and to provide that bank account’s details when applying for a payday loan. This is because the payday lender will transfer cash into your account. Those without a bank account will struggle to secure a loan of any kind.

Is using an online payday lender safe?

Payday loans are subject to regulation aimed at making them as safe as possible for consumers. However, this doesn’t mean there aren’t risks. You should always exercise caution when using any website to input private, personal or financial data, and ensure your connection and device are secure to prevent this information from being compromised when you apply online to a payday lender.

In addition to data security risks, if using a payday loan you should know that payday lenders charge the highest interest rate of any type of lender, meaning that payday loans are the most expensive way to borrow money.

Am I at risk of a collection agency if I borrow money with a payday loan?

Yes, potentially. If you don’t make your loan payments on time, you will initially be subject to fees and interest; this interest will increase as time passes. Eventually, the lender may decide to pursue payment via a collection agency, or may decide to sue you for the debt. You can avoid the threat of a collection agency by making sure you pay back any money you borrow. Financial assistance is available if you’re struggling.

How long do I have to repay my payday loan?

That depends on the loan agreement you signed when taking out the loan and its stipulated pay periods. Most who borrow money via a payday lender do so with the intention of paying the money back within a few weeks. If you extend your loan beyond this, your loan may end up as a debt trap, requiring you to borrow more money to cover its cost.

Does my employer need to know I’ve taken out a payday loan?

No. While you need to be able to prove your income when applying for a payday loan (in order for the payday lender to verify you’ll be able to repay the loan), your employer does not need to know about the loan, and the payday lender should in no circumstances inform your employer. It is illegal for payday lenders to take payment in the form of automated pay cheque deductions.

How fast can I get my payday loan delivered to my bank account?

Your cash is typically delivered to your bank account within a day, but you could receive a deposit within just a few hours. And if you have online banking, this means that you can access money borrowed via this type of loan extremely quickly.

How much will a payday loan cost me?

That depends on which payday lender you go to, how much money you borrow, and for how long. Interest charges usually make up the majority of the cost, though there are fees to account for too. Hidden fees are illegal. Make sure you understand the entire cost of your intended borrowing before agreeing to it.

What’s the flat fee advertised in my payday loan?

Most payday loans are intended to be repaid in one lump sum, so their cost is often advertised as a ‘flat fee’ rather than as an interest rate. You’re likely to see a lender state something along the lines of “$15 per $100 borrowed” – but you should know that this is only if you pay back the cash on time, and does not account for fees, interest and other factors that will increase cost if you fail to repay on time.

How will I get my payday loan?

Most of the time, money borrowed via a payday loan will be automatically deposited into your bank account, or sometimes sent to you via an e transfer. This will be done very soon after your application is approved.

Can I increase my payday loan amount?

No. There are rules that state customers can only take out one loan at a time from each payday lender. You must repay all of the money you borrow before you can borrow any more.

Can I get a payday loan for my business?

No, not in the same way as you can as an individual. If your business needs to borrow money and is struggling to find a lender it can qualify with, the best option is usually a business cash advance. This short term financing option relies on the business’s ability to pay back the money borrowed (plus interest charges and fees) with expected business income.

For other borrowing options for your business, take a look at our business financing page.

Do payday loans build credit?

No, as even if you repay all of the money you borrowed on time, most payday lenders do not report payments to credit bureaus, so positive payment history will not be taken into account in your credit score. It is actually more likely that a payday loan will harm your credit, as high fees and an unaffordable interest rate make it much harder to pay back. The route to perfect credit is unfortunately not via this financial instrument.

How do I choose a payday lender near me?

With so many options to choose from, picking a payday lender can seem tough. To find one that works for you, firstly check whether the lender follows regulations. Then ask: are they transparent about fees? What are their reviews like? Do they mention their excellent customer service, or do they say it’s hard to get help? And lastly, assess whether their offerings work for you needs e.g. do they offer a guaranteed turnaround time, or have an online-only option?

Can I pay off my payday loan early?

Yes. You may be subject to a fee for doing so, but this varies by province. British Columbia, for example, has a low fee compared to other provinces.

What happens if I’m denied a payday loan?

If you’re denied a payday loan, it’s probably because you already have an active loan with that lender. Try applying through another lender. Or, work on paying off your outstanding debts and building your credit with services such as credit counselling or a debt management program, so you can more easily access other borrowing tools.

How much pay do I need in order to secure a fast cash loan?

Although payday loan approval is typically based on employment pay, as long as you have some form of pay coming in, it doesn’t actually matter where it comes from, or how much it is. All that matters is that you can pay back the cash you borrow once you receive your next pay. This means these loans are available to those receiving pay via benefits, child support and so on.

Is applying for a payday loan online safe?

The security of your personal information online will depend more on your personal set up than the lender’s security, as most reputable payday businesses in Canada have fairly robust security protocols. But you should know, if security is a concern, that you can complete an easy application for a payday loan in store. Most lenders are accessible in convenient locations.

What should I do if I don’t understand the payday loan terms?

Speak to someone before you agree to borrow money from a lender who you are wary of dealing with, for any reason. It may be that you can gain clarity by calling the lender, or visiting them in store. But if terms and conditions are opaque even after this, consider dealing with another financial services company.