A payday loan, also referred to as a short term loan, can help you get out of a tight financial spot. However, despite what lenders promise, instant payday loans don’t exist. Some lenders automate approvals online instantly if you meet the eligibility criteria, but the earliest you can get your money is usually within an hour if you apply in person at a store, or by the next business day if you apply online. Find out more in our guide below.
⚠️ Warning: Be cautious with payday loans
Payday loans are expensive. If you're experiencing financial hardship and would like to speak to someone for free financial counselling, you can call Credit Counselling Canada from 8:00am to 5:00pm Monday to Friday at +1 866-398-5999. Consider alternatives before applying for a payday loan:
Local resources. Government agencies, nonprofits and local charities often offer free financial services and help with food, utilities and rent for those in need.
Payment extensions. Talk with your bill providers about a longer payment plan or extension on your due date if you're behind on payments.
Side jobs. Today's digital marketplace offers the ability to more easily sell unwanted items, sign up for food delivery or drive for rideshare services.
No, but you may be able to receive your funds quickly if you apply in person at a store. Some lenders can have your loan to you within an hour or two, which may be the quickest way to get a loan.
If you apply online, your loan funds are typically available by the next business day. Applying online will result in your loan being directly deposited into your bank account.
Compare short term loan options and apply securely
Check the websites of any lenders you’re interested in to confirm they operate in your province or territory of residence.
Maximum borrowing costs
You should always refer to your loan agreement for exact repayment amounts and costs as they may vary from our results. The table below shows the maximum allowable cost of borrowing under a payday loan for each province:
If you want to get a quick payday loan, you will usually need to meet the following eligibility criteria:
Be 18 years old, or the age of majority in your province or territory
Be a Canadian citizen or a permanent resident with a valid Canadian address
Have a working bank account
Have proof of an income
Applying at a storefront means your application is processed within a few minutes, but you’ll need to bring along your documentation. With online payday loans, you typically submit everything online from the comfort of your own home and receive a preliminary decision within minutes.
The time it takes for funds to get to your bank account depends on the lender you choose. Storefront lenders can give you funding that day, and most online lenders can transfer your loan directly into your bank account as soon as the next business day.
If you apply in store, you may have to leave behind a physical cheque that the lender can cash on the repayment due date. With online loans, your repayments will be automatically debited from your bank account on that due date.
Tickets to the game
Hugo’s best friend is moving soon, and he wants to treat him to tickets for the upcoming Jays game. Good seats are costly – about $90 per person – and Hugo knows they’ll be sold out if he waits until his payday.
He decides to look into a payday loan that deposits cash directly into his chequing account. Hugo finds a lender with minimal fees that he can afford, and he completes an in-store application. The next day, he has the money he needs to give his friend the send-off he deserves.
Top features to compare
If you’re thinking of applying for a quick payday loan, take some time to compare the following features to choose a lender that’s right for you.
Quick processing time. Some lenders provide faster approval if you apply in person at a physical store. Others can take a few days to get the funds to you. If you need the money quickly, confirm how long a lender will take to give you the funds you need.
Larger loan amounts. Some provinces have regulations surrounding how much a lender can borrow. Your income, credit score and ability to repay your loan will likely play a role in your ability to take out a larger loan amount.
Interest and annual percentage rate (APR). Again, provincial regulations sometimes restrict the maximum interest payday lenders can charge, but increased competition means you can expect to find some loan providers that charge lower interest rates than others. Compare your options in order to find the best deal.
Benefits and drawbacks to consider
What are the benefits?
You can use the funds for any purpose. As long as your loan is used for legal and legitimate purposes, you can use your loan for a variety of expenses including bills, repairs and even vacation expenses.
You can still apply with a bad credit rating. A bad credit score doesn’t have to stop you from getting a loan. Most direct payday loan providers focus on your ability to repay your loan, instead of your credit score.
You’ll get the money quickly. If you need money in a hurry, applying for a payday loan is one of your best options. Some lenders can give you the required money within an hour or two, while others may take one or two business days.
What are the drawbacks?
You’ll pay higher fees. Payday loans are known for their excruciatingly high interest rates when compared to conventional loans. If you don’t repay your loan on time, you could be penalized with additional fees.
It’s a short term solution. You typically have to repay your loan on your next payday. This means most payday loans have terms between 7 and 31 days. If you want a longer loan term, consider an installment loan. Using short term payday loans is not a solution for a long term financial problem.
Is there anything else to consider before applying?
When applying for a payday loan, keep the following in mind:
Avoid falling for a payday loan scam. There are many lenders in the online space who prey on people who need money urgently. Be careful when selecting a lender and always do research to find one who is reputable and trustworthy.
Ensure a lender abides by any laws set in your province regarding maximum APRs and borrowing amounts. Not all provinces and territories have regulations, but if yours does, make sure the laws are being followed.
Pay particular attention to the time a lender takes to process your application and provide you with your approved funds. If you need money in a hurry, waiting four or five days to get it might not be best for your needs.
Make sure you know exactly how you’re going to repay the loan. If you aren’t able to pay back the loan on time, you will likely be charged extra fees and higher interest rates. On top of that, your credit rating might also suffer if lenders choose to report your late repayments to a credit bureau. If you don’t think you can make your loan repayments on time, avoid taking out a loan in the first place.
Are payday loans available in my province or territory?
Payday loans are available in all provinces and territories across Canada. You should be aware that payday loans are regulated by individual provinces, which means costs and fees can vary. Ensure that any lender you choose abides by the laws of the place you live.
At the time of writing in January 2019, the Yukon, Nunavut and the Northwest Territories do not have legislation regulating payday loans at the territorial level. Payday loans are regulated in these territories at the federal level only.
Whether you apply in person at a store or online, you can complete most applications in 10 to 15 minutes, provided you have the required information on hand.
Yes, online payday loan lenders will require your banking details in order to directly deposit your loan and automatically withdraw loan repayments from your bank account.
Most payday lenders will directly deposit your loan into your bank account. Alternative funding can be deposited onto a prepaid credit card or funded in cash. Confirm your options with your potential lenders before applying.
You will usually need to supply the following:
Personal details. Your full name, date of birth, address, phone number and email.
Financial details. Your banks name, transit number and your account number.
Employment details. Provide proof of your income with bank statements or pay stubs. You may additionally have to provide your employer’s name and contact information.
Elizabeth Barry is Finder's global fintech editor. She has written about finance for over six years and has been featured in a range of publications and media including Seven News, the ABC, Mamamia, Dynamic Business and Financy. Elizabeth has a Bachelor of Communications and a Master of Creative Writing from the University of Technology Sydney. In 2017, she received the Highly Commended award for Best New Journalist at the IT Journalism Awards. Elizabeth's passion is writing about innovations in financial services (which has surprised her more than anyone else).
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