Legitimate short term loans

Before you apply for a loan, it's essential that you ensure the lender is legitimate. Here's what you need to know in order to avoid a scam.

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While short term loans, also known as payday loans, can give you fast access to money when you need it, it’s important that you always deal with legitimate lenders. Payday loans are available in all provinces and territories across Canada, however these lenders must abide by any regulations in place. There are some lenders who seek out people who urgently need cash, so don’t fall prey to one of these predatory lenders.

Legitimate payday loans are provided by lenders who abide by all provincial regulations that are currently in place. Laws and regulations govern features like maximum interest rates, fees and loan terms. Make sure you are dealing with a legitimate lender and that the loan you are applying for is the real deal and not a scam.

⚠️ Warning: be cautious with short-term loans

If you're experiencing financial hardship and would like to speak to someone for free financial counselling, you can call Credit Counselling Canada on 1800 007 007. It's open from 8:00am to 5pm, Monday to Friday. When comparing short-term loans, ensure you take into consideration all fees, charges and interest to understand how much your loan might cost in total.

Alternatives to short-term loans

Consider these alternatives before applying for a payday loan:

  • Use online Government resources. The Financial Consumer Agency of Canada website demonstrates how small amount loans work – and suggests alternative options that may help you.
  • Payment plans. Talk to your electricity, gas, phone or water provider to see if you can work out a payment plan or receive an extension on your due date if you’re behind on payments.
  • Contact your creditors. Speak with creditors about extending the due date of your payment, or working out a new payment plan that works for both of you. Seek personal loans elsewhere. Consider a small personal loan from a bank or a credit union. You may qualify for a loan with much lower interest rates than those offered by payday loan companies.
  • Pay with credit card. Consider paying with your credit card to cover your emergency bills or payments. This is not a long term solution, as you’ll need to pay off the balance as soon as possible, but it’s an alternative to a short term loan with high – and immediate – interest rates.

Cash Money Payday Loan

Apply online or in store and get approved for up to $1,500.
  • Minimum loan amount:
  • Maximum loan amount: $1,500
  • Interest Rate: Varies by Province
  • Fees: Up to $17 per $100 borrowed (rounded to nearest dollar)
  • Loan term: 12-14 days. Varies by Province
  • Turnaround time: In as little as 15 minutes with INTERAC e-Transfer® if approved
  • Key requirements: Be 18+ years old, provide proof of recurring income
Cash Money Payday Loan
  • Simple application process
  • Fast turnaround time
  • Extended business hours
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Compare legitimate short term loans and apply securely

Check the websites of any lenders you’re interested in to confirm they operate in your province or territory of residence.

Name Product Max. Loan Amount Serviced Provinces/Territories Turnaround Time Loan Term Interest Rate
Cash Money Payday Loan
Nova Scotia
New Brunswick
British Columbia
In as little as 15 minutes with INTERAC e-Transfer® if approved
12-14 days. Varies by Province
Varies by Province
Apply for your first $300 payday loan at a $20 borrowing cost (excludes Alberta, Manitoba, New Brunswick or Saskatchewan applicants). Residents of Manitoba and New Brunswick cannot apply for a loan online (must apply in-store).

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What is a “legit” short term loan?

Short term loans typically need to be repaid by your next payday, whether that’s two weeks from now or one month. A “legit” payday loan is one that’s offered to you legally, meaning the lender abides by all the local regulations. Short term loans can be applied for both online and in person at an outlet, however they all fall under the same regulations.

Short term loan lenders typically have much more relaxed eligibility criteria than traditional lenders like banks and credit unions. Even if you have bad credit, are on a lower income or receive government benefits, you’ll be able to apply for a short term loan. However, this relaxed service comes with much higher interest rates and fees than other types of loans. Payday loans are usually regulated by the government, so ensure that the lender you choose to go with abides by all provincial/territorial regulations, including maximums on annual percentage interest rates (APRs), fees charged and borrowing limits and terms.

Lenders must make a reasonable judgment on an applicant’s ability to repay the loan. The lender should assess factors such as income, living expenses and existing debt in order to determine if the applicant can reasonably repay the loan.

If a lender doesn’t ask you for any of that information or doesn’t attempt to evaluate if you can afford the loan, the lender probably isn’t legitimate.

Three things to look for in a legitimate short term loan

The following should help you find legit short term loans easily:

  • Better Business Bureau accreditation. The Better Business Bureau (BBB) is more than a century-old non-profit organization that helps identify trustworthy businesses across Canada, America and Mexico. Different short term lenders across the country have BBB accreditation, and dealing with these businesses provides extra peace of mind.
  • Contact details. If you’re looking online for legit short term loans, take some time to find a lender’s contact details. If a lender provides no more than a contact form or an email address, see how responsive they are before you apply. A legitimate short term lender should not shy away from providing a physical address, phone support or live chat.
  • Fees and charges. Direct lenders of legit short term loans are upfront about the fees and charges you have to pay during the loan term, and they adhere to all given maximum limits. The loan contract should clearly set out all applicable fees and charges, so be sure to read it thoroughly in order to understand exactly how much you will have to pay.

How to protect yourself from payday loan scams

Benefits of a legit short term loan

If you want to find a legitimate short term loan, keep an eye out for the following features:

  • Abiding by provincial regulations. With legit payday loans, you don’t have to worry about lenders charging you more than the maximum limits allowed. Check what the regulations are in your province or territory to see if your lender is operating legally.
  • Multiple options. You can get in touch directly with lenders of legitimate short term loans, or you can go through a loan-matching service.
  • Bad credit is OK. Many lenders provide legit short term loans to people with bad credit, and while they may run a credit check, they focus more on your ability to pay the loan back instead.
  • Quick access to funds. If you apply in person at a store, you can get cash almost as soon as a lender approves your application. When you apply online, the money is transferred into your bank account after you accept the loan contract, usually by the next business day.
  • Use money for any reason. Short term lenders don’t place any stipulations on how you can use your loan, as long as you’re using the money for legitimate reasons.

Don has a costly vet bill

Man with dog Don has heard the horror stories with payday loans — those scams run by con men online. However, when he finds a stray puppy and takes it to the local vet for shots, he spends more than he thought he would, leaving him strapped for cash for the rest of his monthly expenses.

Don has bad credit from when he was younger and hasn’t paid off his credit cards bills fully in the last few months, so he doesn’t have a large line of credit available. Traditional banks don’t lend small amounts of money, so Don isn’t sure where to turn.

Instead of giving up, Don heads online and looks up how to tell if a lender is legitimate or not. He compares different types of short term loans and finds one that abides by the regulations for his province, and is accredited by the Better Business Bureau.

He takes out a $200 payday loan with this reputable lender and works the costs into his next month’s budget.

Some more considerations before you apply

You’ll have to pay additional fees if you make a late payment or miss one entirely, and your lender may report your late repayments to one of the two credit bureaux – Equifax or TransUnion. Reconsider applying if you think you may have trouble repaying your loan.

Take some time to go through the loan’s terms and conditions, as this document tells you how much you may have to pay in different circumstances, such as rollovers or late payments. Some provinces also don’t allow you to take out more than one within a given period of time. If your lender says you can, they may not be trustworthy.

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 the territories at the federal level only.

Find out how much lenders can charge across Canada

Frequently asked questions

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