If you’re on social assistance and looking to get a payday loan to cover some bills or expenses, you have options. Use this guide to find out where you can apply for payday loans as a welfare recipient in Canada, what other loans you can get with your income and what you should know before signing on the dotted line.
Can I get e-Transfer loans on social assistance?
Yes, you can. Loans that you can apply for that accept social assistance and often offer e-Transfer include payday loans, installment loans, early pay advances and lines of credit. Out of these options, payday loans and early pay advances are generally easier to get – but watch out for high interest rates.
Compare e-Transfer loans on social assistance
The Canadian lenders below accept welfare as valid income and offer e-Transfer loans.
High-cost payday loans are unsustainable for borrowing over a continued period of time and are expensive as a means of longer-term borrowing. View payday costs and regulations by province here. If you're experiencing financial hardship call Credit Counselling Canada for free financial counselling (Monday-Friday 8:00am-5:00pm at +1 866-398-5999). You may also want to consider payday loan alternatives.
Compare payday loans that accept social assistance in Canada
There are also payday loan providers in Canada that accept social assistance as a legitimate source of income. That said, since payday loans are a very expensive loan option, only consider them as a last resort.
Canadian lenders look at income to check whether you can afford a loan. Not many lenders, including payday lenders, recognize welfare or social assistance as a valid form of income, so if you’re looking for a payday loan on social assistance, aim to find a payday lender that specifically lists social assistance as a verifiable source of income (like the ones listed above).
Many payday lenders use Interac e-Transfer to send money fast once you’re approved. Your bank account will have to be registered to accept e-Transfers.
Loan amount. You can borrow $100 to $1,500, but some provinces limit the amount to a percentage of your social assistance income — 50% in Ontario, BC, Saskatchewan and Newfoundland and 30% in Manitoba and New Brunswick.
Loan term. Payday loans are typically repaid by your next payday.
Borrowing fee. You’ll pay anywhere from $14 to $17 for every $100 borrowed.
Bad credit is OK. Having poor credit doesn’t necessarily mean you’ll be denied a payday loan. Social assistance payday loans have more flexible eligibility requirements than other loans.
Non-employment income is OK. Some payday lenders accept non-employment income, and that includes social assistance.
How to apply for payday loans as a welfare recipient
While the application process varies among lenders, you will usually need to supply the following information to get a payday loan on social assistance:
Valid ID with your name and address
Valid phone number
Pay cycle frequency (i.e. monthly)
Proof of social assistance income (you can get this by logging into your CRA MyAccount)
Bank account information where your funds will be transferred (chequing account, routing and institution numbers)
The use of payday loans in Canada
As living costs remained high in Canada, more people appeared to rely on short-term credit. According to results from the Finder: Consumer Sentiment Survey Q2, 44% of respondents used a payday loan in the first three months of 2023, compared to 19% of respondents who used a payday loan in the last three months of 2022.
How can I get my payday loan funds aside from e-Transfer?
Aside from e-Transfer, payday lenders offer these funding options:
Direct deposit. With this method, you give your banking information or void cheque to your lender, who will then deposit the funds directly into your bank account.
Cash in-store. You can visit a physical store, get approved on the spot and walk out with your money.
How to compare payday loans that accept social assistance in Canada
When comparing payday loans as a welfare recipient, ask yourself the following questions:
Does the lender follow provincial regulations? Each province has its own regulations for payday loans, such as maximum borrowing cost, loan terms, loan extensions and more.
Is the lender transparent about fees? The provinces also have rules about how lenders should disclose fees. Your lender should be upfront about how much it’s charging you.
Does the lender assess your ability to repay? Lenders must make a reasonable judgment on a welfare recipient’s ability to repay the loan. They do so by looking at factors such as your income and debts. They might also do a credit check. Avoid lenders that guarantee you’ll get approved no matter what.
What to watch out for with payday loans for welfare recipients
While payday loans are helpful when you’re in a financial bind, there are some details you should keep in mind when considering an e-Transfer loan on social assistance:
Cycle of debt. The high rates, short repayment terms and late payment fees of payday loans can cause a cycle of debt. If you think you might have problems repaying the loan or having enough income left for other expenses once you repay, avoid getting the payday loan in the first place.
Scams. There are lenders who prey on people who need money urgently. Be careful when selecting a lender, and do research to find one who is reputable and trustworthy. Learn more about payday loan scams.
A line of credit is also worth considering, but it is harder to qualify for than other types of loans.
Features of online lines of credit
Open term. Unlike a payday loan, you can pay off your balance partially or, at any time, in full. A flexible term allows you to repay the balance when you’re in a better financial position.
Borrow up to your limit. You can borrow as much or as little as you want up to an approved limit.
Potentially cheaper than a payday loan. For example, Mogo says its MogoMini line of credit is 88% cheaper than a payday loan if you pay off the balance in time.
Higher interest rate. Even though an online line of credit is potentially cheaper than a payday loan, it still comes with a very high interest rate.
What to watch out for
Waiting too long to repay your loan. With an open term, it can be tempting only to pay the interest and hold off on repaying the whole balance. But if you wait too long, especially with such a high interest rate, you could end up paying more interest than a payday loan.
Overspending. With easy access to funds, it can be tempting to borrow more than you need.
Yes, it’s possible to get a $300 loan while on social assistance. Lenders generally consider this amount to be a small loan, and it’s easier to approve people for a small loan than a large loan.
Tips to get e-Transfer loans on social assistance
Do not rush. Don’t rush into signing a contract without first understanding the terms of your loan, including the cost, loan term and repayment schedule. Avoid lenders that do not clarify the terms of your loan and the overall cost.
Avoid lenders that require loan insurance. Loan insurance should be completely optional, never required.
Avoid lenders that ask for upfront payment. Legitimate lenders do not ask for upfront payment for welfare loans. If you encounter someone asking for this, it could be a scam.
Other financing options for people receiving social assistance
Here are other possible loan options for people on welfare:
Credit card cash advances. This may be an option if you already have a credit card and haven’t borrowed up to your credit limit. Credit card cash advances are expensive but have lower rates than payday loans, with APRs usually around 20% to 23%.
Car title loans. With an auto title loan, you put your vehicle up as collateral. If you fail to pay back your loan, the lender can repossess your car, boat, RV or motorcycle. For these types of loans, you’ll have to outright own your vehicle.
Home equity loans. Are you a homeowner? You may be able to borrow against your home’s equity through a home equity loan or line of credit. This is a secured loan – meaning you use your house as collateral – but it often comes with more lax eligibility criteria than an unsecured personal loan.
Can I get a loan on welfare in Ontario?
Yes. Although fewer Ontarian lenders accept welfare as a legitimate source of income, you can still get a loan on welfare in Ontario from certain lenders, like the ones listed above. These Ontarian lenders tend to have more lenient eligibility requirements, which often include accepting a wider variety of income as long as you can prove that you’ll be able to pay back what you borrow.
When is the next welfare payment in Ontario?
To help you plan if you need a loan and for how much, you’ll have to consider how long you have to go before your next social assistance payment. You can expect to receive your next Ontario welfare payments deposited in your bank account on these dates:
February 29, 2024
February 29, 2024
Ontario Child Benefit
February 20, 2024
Installment loan vs payday loan: Which is better if you’re receiving welfare?
To illustrate what you can expect from an installment loan vs a payday loan, as a recipient of Ontario Works income support, here’s an example of the costs based on a $500 loan:
Loan amount needed
Cost of loan
$15 per $100 borrowed ($75 total). This is an APR of 391.07%
22% APR + $225 broker fee
One full payment of $575
Six bi-weekly payments of $125
Total loan cost
When you compare the dollar amounts of the total loan costs, the payday loan is cheaper. However, you must repay a payday loan in full by your next payday, whereas you can break up an installment loan into smaller, more manageable payments over a longer period of time. When choosing a loan, ask yourself which method would put less strain on your finances.
*The information in this example, including rates, fees and terms, is provided as a representative transaction. The actual cost of the product may vary depending on the retailer, the product specs and other factors.
The results of the Finder: Consumer Sentiment Survey Q2 were collected through an online Pollfish survey conducted between April 27 and April 29, 2023. In the survey, 1,011 Canadians from across the country were asked about their past use and current plans to use Payday loans and other forms of short-term credit. The estimated margin of error for the survey is +/- 3%, 19 out of 20 times.
Look for lenders that accept welfare as a valid source of income because not all do. Carefully compare rates and fees, and take the time to understand the terms and conditions of any loan you’re interested in getting. If you apply online and you’re approved, many lenders can e-Transfer your social assistance loan to your bank account within minutes.
Frequently asked questions about loans that accept social assistance
Yes, you can get a payday loan on Ontario Works – you simply need to apply with a lender that accepts Ontario Works as a valid form of income. Payday loans have lenient eligibility criteria, so some payday lenders in Ontario can consider your application. Learn more about payday loans in Ontario.
It's possible. There are payday loans that accept welfare as a valid source of income. Other loan options include lines of credit, installment loans and car title loans.
Payday loans are considered an easy loan to get approved for, but there are still some basic eligibility criteria you would need to meet. A payday loan is not guaranteed, and you should avoid lenders that say they guarantee approval because they may not be legitimate.
If you're looking for a loan for $300 on social assistance, you can choose from installment loans and payday loans. Although payday loans may seem more convenient than installment loans, keep in mind that with high fees and fast turnaround times, payday loans can be more expensive than installment loans. Compare your $300 loan options on social assistance here.
Leanne Escobal is a publisher for Finder. She has over 11 years of experience in financial services, specializing in content and marketing. Leanne has completed the Canadian securities course (CSC®) as well as the personal lending and mortgages course by the Canadian Securities Institute. She has a Bachelor of Arts (Honours) in English literature and creative writing from Western University.
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