No credit check payday loans
Sounds like an easy way to get money? Sure, but here's how they can cause more problems than they solve.
Unexpected financial emergencies can arise when we least expect them and if you don’t have enough cash on hand, you may be tempted to dip your toe into the payday loan market. While the payday loan space has minimal requirements in order to be eligible for a loan, this type of loan is not beneficial for you as a borrower. Lenders tend to take advantage of people who need cash urgently and charge high interest rates and fees.
If you have bad credit and need a loan, you may be tempted to apply for a no credit check payday loan. This could be a costly mistake. Learn 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 these alternatives before applying for a payday loan:
- Contact your creditors. Speak with creditors or your electricity, gas, phone or water providers about extending payment due dates or working out a new payment plan.
- Consider a personal loan. A personal loan usually comes with much lower interest rates than a payday loan.
- Pay with credit card. While not a long term solution, paying with credit card can help cover emergency expenses. You’ll need to pay off the balance before it accrues interest.
Cash Money Payday Loan
- 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
Is a “no credit check” payday loan really what it implies?
While no credit check payday loans do not conduct traditional credit checks, don’t assume that doesn’t mean there is no approval process. The lender may check for your employment history, previous debts and your income to determine your eligibility. Remember, lenders are less interested in your credit score and more interested in your ability to repay the loan.
Since no credit check payday loans function like other payday loans, borrowers tend to think they’re safe. Payday loans are small, short term unsecured loans that are expected to be paid back (plus interest and fees) within an appointed time period, usually 7 to 31 days.
Compare payday loans
Check the websites of any lenders you’re interested in to confirm they operate in your province or territory of residence.
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.
Eligibility requirements for a no credit check payday loan
The specific requirements will vary between lenders and products, but the criteria usually includes:
- Age. You must be at least 18 years old, or the age of the majority in your province or territory.
- Income. Applicants must prove that they receive a regular income.
- Banking statements. To assess income and expenses, lenders usually require read-only access to bank statements.
- Liabilities. Applicants must provide details of any other liabilities including outstanding loans or credit card repayments.
As long as the eligibility requirements are met, people can apply for these loans online, though approval is not guaranteed. If approved, the lender may make the deposit within a matter of days or even on the same day.
The payday lender traps
In return for these quick and easy no credit check loans, payday lenders set up a number of traps that can result in borrowers getting into more financial trouble than when they started.
- Excruciatingly high interest rates. A lender’s fees may appear reasonable at first. For example, a $25 fee on a $100 loan doesn’t seem high, but this is actually a 470.96% annual percentage interest rate (APR). These astronomical rates keep borrowers in debt with their payday lenders.
- Repeat short term lending. When you can’t pay back the loan you agreed upon, your payday lender will offer to let you take out another loan for additional fees. This can be the beginning of a vicious cycle of debt.
- Loan default. This occurs when the borrower can’t pay back the loan or take out an additional one. Borrowers are then subject to having funds withdrawn from their bank accounts, having their governmental funds withheld, the repossession of their purchases and harassment by debt collectors.
- Penalty fees. Payday lenders often set up automatic repayments directly from the borrowers bank account. If an attempt by an online payday lender to withdraw payment results in an overdraft, meaning you don’t have enough money in your account to pay the cost, borrowers will face another fee from the bank this time.
- Bank account closure. If a bank account maintains a negative balance for an extended amount of time, the bank may close the account. People are then forced to look to high-fee debit cards to pay bills since regular banks will no longer do business with them.