As Canadians head into their golden years, their income sources shift into government-provided benefits, such as Canada Pension Plan (CPP) and Old Age Security (OAS), and/or a private pension. If these are your primary sources of income and you’re looking for a loan, you may find your options are more limited compared to when you were actively employed. But you still have options, even if you have bad credit.
Whether you’re looking for a personal loan, payday loan or cash advance, here are options available to seniors in Canada.
| Lender | Cost | Loan amount | Loan term | |
|---|---|---|---|---|
Cash Advance |
0% + monthly fee from $2 | $20 – $500 | Flexible | |
|
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Personal Loan |
8.99% - 35.00% | $500 – $50,000 | 3 - 120 months | Go to site |
Personal Loan |
9.99% - 35.00% | $500 – $50,000 | 3 - 60 months | Go to site |
Credit Line |
0% | $30 – $250 | 31 days, extendable | Go to site |
Cash Advance |
0% | $20 – $750 | Next pay cycle (90 days max) | Go to site |
| Licensed payday lender | Interest rate | Loan amount | Loan term | |
|---|---|---|---|---|
Payday Loan |
$14 per $100 borrowed | $100 – $1,500 | 7 – 62 days | Go to site |
Seniors looking for loans while receiving pension income can qualify with personal loan providers, payday loan lenders and cash advance apps. While traditional banks in Canada may also accept pension income, you typically need to have good credit and a debt-to-income (DTI) ratio under 40% to get approved.
Seniors with bad credit can get funding from alternative lenders. Here are some options worth checking out.
| Lender | Why it can help |
|---|---|
| LoanConnect | A loan search platform that quickly connects borrowers with multiple lenders, some of which work with retirees and borrowers with low credit or limited credit history. |
| KOHO | Doesn’t require you to go through a credit check or have an income, plus it only offers amounts under $500, which are easier to get approved for. |
| Nyble | Doesn’t require a credit check, accepts many types of incomes, and reports payments to the credit bureau to help you rebuild your credit. |
| Bree | Doesn’t require a credit check and accepts many types of incomes, but make sure to opt for free three-day delivery because its instant funding service is expensive. |
Several lenders online offer instant funding for bad credit, such as KOHO, Nyble and Bree. Instant funding comes with a fee, no matter where you apply; some may charge you per loan, while others may charge a monthly subscription fee.
Banks, credit unions and online lenders of personal loans usually take longer to process applications and deliver funds. But if you’re in BC, Vancity’s Fair and Fast Loan is worth checking out, which provides funding in 10 minutes. We don’t usually see this perk from traditional lenders.
If you need instant funding, make sure your bank account is registered for Interac e-Transfer, because this is how most lenders send funds right away.
Yes, many payday lenders offer quick loans for pension recipients. However, since they’re very expensive, only consider them when you’ve exhausted all other alternatives. If you’ve decided a payday loan is right for your situation, make sure to apply to a licensed lender. Those who are licensed must follow provincial payday loan regulations.
Examples of licensed payday lenders in Canada that accept pension include iCash, Money Mart and Loan Express.
Yes, some lenders in Canada offer no credit check payday loans to pensioners, like Cashco, Money Mart and PAY2DAY. Rather than looking at your credit score, they’ll look at your income and spending.
It’s worth noting that payday loans max out at just $1,500 and must be repaid within 62 days. They’re also a very expensive way to borrow, with APRs over 300%, which can cause financial strain.
If you plan to get a payday loan, ensure you have the money to make the full loan repayment when the time comes, and you’ll have enough left over to pay for other bills and expenses.
You can get approved for a payday loan using your CPP, OAS or other type of pension as long as it’s recurring and paid directly into your bank account. Common reasons you may not get approved are if your existing debts and expenses are too high or if the lender can’t verify your income or identity.
You don’t have to turn to payday loans if you need easy approval and quick funding. Cash advance apps give you access to a small loan without needing to go through a credit check, so you can apply no matter your credit score.
They offer instant approval and funding within minutes for a fee. They also offer more flexible repayments than payday loans.
Yes, they could be. As an example, here’s how much a $100 cash advance could cost you vs. a $100 payday loan.
| $100 cash advance | $100 payday loan | |
|---|---|---|
| Loan amount | $100 | $100 |
| Cost of loan | No extra fee, 0% APR | $14 for every $100 borrowed, 365% APR |
| Loan term | 14 days | 14 days |
| Payment amount | $100 | $114 |
In this example, you save $14 by choosing the cash advance app. Keep in mind, though, that this is with standard funding, which takes up to three business days. If you opt for instant funding, you’ll pay an extra fee. Also, if you’re a first-time borrower, cash advance lenders might approve you for amounts under $50 only.
Personal loans in Canada have larger amounts than cash advances and payday loans. They typically come with loan terms as short as 3 months or as long as 5 years. Although the average personal loan rate in Canada is 7.53%, interest rates can range between 6.99% for excellent credit and up to 35% for bad credit.
Requirements vary a lot among lenders. Banks and credit unions require good to excellent credit over 660, while alternative lenders accept fair to bad credit under 660.
A recurring income is also a must, no matter which lender you apply to.
While it may be a bit harder to get a personal loan via a traditional lender with just your pension and OAS income, online lenders are readily available to offer pension loans in Canada. Here’s a closer look at what you can get.
Lenders want to see that you can comfortably pay back your loan and still pay for expenses in life, such as food, housing and other debts.
While many lenders require employment, some accept other forms of income, such as:
To apply for a loan online, fill out an application form with your name, contact info and income details. Depending on the lender, you may be required to go through instant bank verification so the lender can provide a quick decision.
With bank verification, you connect your bank account to provide the lender with view-only access to your bank statements. If you’d rather not go through bank verification, some lenders allow you to upload or email your documents.
Documents may include the following:
Before signing a contract with any lender, it’s crucial to understand the terms and conditions, especially any interest or fees associated with your loan. According to a Finder: Consumer Sentiment Survey, 3 in 10 Canadians are either not confident at all or only slightly confident in understanding loan contracts. If something is unclear to you, don’t hesitate to ask the lender for clarification.
If a lender isn’t transparent with you, that’s a red flag.
Even if you’re no longer in the workforce, you can still apply for a pension loan in Canada. Many lenders accept OAS, CPP and private pensions as valid income, which means if you’re able to make your loan repayments and you meet the other eligibility requirements, you could be approved.
Want to learn more about loans? Head to our personal loans guide here.
We searched the loan marketplace for lenders that accept pensions and update the list as we find more options. Explore your options here.
To make comparing even easier, we came up with the Finder Score. Interest rates, fees and features across 40+ personal loans are all weighted and scaled to produce a score out of 10. The higher the score the better the loan—simple.
To make comparing even easier, we came up with the Finder Score. Interest rates, fees and features across 5+ cash advance providers are all weighted and scaled to produce a score out of 10. The higher the score the better the loan—simple.
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