Learn how to get a short-term loan in Newfoundland and Labrador.
If you’re facing a financial emergency, you might find yourself in need of some fast cash. Enter payday loans: a quick and easy way to get your hands on emergency money before your next paycheque.
We’ve designed this guide to help you navigate the ins and outs of cash advance payday loans, so that you have as much information as possible before you accept the terms of your loan.
Can I get a payday loan in Newfoundland and Labrador?
Yes. Short-term loans are legal in Newfoundland and Labrador. Federal laws regulate the maximum amount of money that can be issued by lenders ($1,500) and the max length of the term (62 days).
Newfoundland and Labrador lacks provincial regulations to govern the use of payday loans. This means that they don’t cap their maximum interest rates, which currently sit at the federal maximum (equal to $60 per $100 borrowed). That being said, Service NL has proposed a maximum rate of $21 for every $100 borrowed, which is expected to be adopted in the near future.
Four quick facts about payday loans in Newfoundland and Labrador
- Maximum loan amount: $1,500
- Minimum loan term: 1 – 2 weeks
- Maximum loan term: 62 days
- Maximum interest: $60 for every $100 that you borrow
What fees will I have to pay?
Since Newfoundland and Labrador hasn’t adopted provincial payday loans legislation yet, they currently fall back on federal rates, which allows lenders to charge up to $60 for every $100 borrowed. The table below shows the fees on payday loans, compared to the typical costs of some common alternatives.
|Loan Amount (over 2 weeks)||Payday loan fee||Credit card fee (23%)||Line of Credit (7% + $5 fee)|
Can I get a no credit check loan in Newfoundland and Labrador?
You may be able to apply for a no credit check loan in Newfoundland and Labrador, but it will end up costing you more money in the long run. These types of loans are often more expensive and are typically offered by predatory lenders. You’ll have better luck taking out a loan with a lender willing to do a soft credit check, which won’t affect your credit rating. In most cases, these lenders won’t turn borrowers away for having a bad- or poor-credit rating, and you’ll save money on interest rates and fees.
What should I keep in mind before applying?
Payday loans are a particularly risky kind of debt in Newfoundland and Labrador because they are largely unregulated by the province. Lenders can charge up to 60% interest on loans, which can cost you hundreds of dollars on a relatively small loan. There are also very few rules in place to prevent predatory lending practices like rollovers (which allow borrowers to use a future loan to pay off their current loan). Some payday lenders will offer cheaper loans than others, so make sure you shop around for the best rate before you accept the terms of your contract.
How can I tell if a lender in Newfoundland and Labrador is legit?
Lenders in the Newfoundland and Labrador have very few legally-mandated obligations to protect customers, which means that it’s easier for them take advantage of people going through a rough patch. Look for the following signs where possible to make sure you’re working with a reputable company.
- The lender follows federal payday loans legislation. Avoid lenders charging interest rates above $60 per $100 loan and make sure to compare 3 – 4 lenders to find the best terms.
- They don’t allow rollovers or multiple loans. Newfoundland and Labrador is one of the only places in Canada where “rolling over” your loan is still legal. That being said, try to avoid lenders that allow rollovers since it’s a predatory practice which has been outlawed in many other parts of the country.
- They provide same-language contracts. Payday loan contracts should be written in a language you understand and should clearly spell out your contractual obligations – including charges, terms and conditions of the loan.
- The lender doesn’t request access to your bank account. The lender shouldn’t request excessive personal or banking details like your direct deposit information or social insurance number.
Watch out for online lenders
Predatory payday lenders are more inclined to work out of provinces that don’t enforce tough laws or regulations. While some of these lenders work in Newfoundland and Labrador, the majority set up shop online. If you’re thinking about taking out an online payday loan in Newfoundland and Labrador, know the risks and your rights before you sign on the dotted line.
- Illegally high interest rates or fees. Lenders that charge rates above $60 per $100 are breaking federal payday loan regulations surrounding allowable interest rates. Make sure to report their activities to Service NL at 1-709-729-4834.
- Identity theft. Online lenders have been known to work with third-party companies to steal customer’s personal and banking information. Avoid handing over direct deposit information and be wary of lenders who want personal details like your Social Insurance Number.
Given that Newfoundland and Labrador doesn’t regulate loans provincially, there are more risks associated with borrowing short-term loans both online and in-person. Look for short-term alternatives where possible to save money and protect yourself from identity theft or a hacked bank account.
How to file a complaint against a lender
If you feel that the payday loan lender you’ve signed on with is doing something illegal or unethical, then you can file a complaint with Service NL at 1-709-729-4834. You may have a case against your lender, particularly if they’re charging more than $60 per $100 on your loan.
Short-term loan alternatives in Newfoundland and Labrador
If you’re not sure you want to take out a high-interest payday loan, you have other options. Here are some programs and lenders you might want to check out.
Newfoundland and Labrador assistance programs
Newfoundland and Labrador has a number of programs that can provide some much-needed relief for residents and newcomers who are struggling to make ends meet.
- Income assistance provides financial assistance for low-income individuals and families who need help with covering the costs of basic necessities like food, shelter and heating.
- Child benefit provides a monthly cash benefit to help low‑ and modest‑income families with the cost of raising children under 18 years of age.
- Health related services provide financial support for low-income individuals to receive vision care, prescription drugs, medical transportation, dental services and other incidentals.
Local financial institutions
Some credit unions and local banks offer less expensive small-dollar financing with longer repayment terms. You might also want to look into credit builder loans, which come in small amounts and can help you improve your credit score by reporting every on-time repayment you make to credit bureaus. You also typically have more time to pay it off.
If you’re struggling with your personal finances, you might consider enrolling in a credit counselling program. These can help you make a budget and manage or consolidate your debts.
How can I apply for short-term loan?
If you’re interested in applying for a short-term loan in Newfoundland and Labrador, you’ll need to meet the following eligibility criteria:
- Be at least 19 years old
- Prove 3 months of continuous employment
- Give proof of address (e.g., they can ask to see a utility bill)
- Have a chequing account
To complete your application successfully, prepare to submit some basic information:
- Personal details, such as your name, date of birth, Social Insurance Number and a valid form of ID
- Contact details, such as your residential address, email address and phone number
- Details about your employment and income
If you’re considering taking out a payday loan, familiarize yourself with the laws of Newfoundland and Labrador to ensure you get the best terms for your loan. Make sure you’re in the position to pay off the loan (with fees as high as 60% tacked on) at the end of your term. Be wary of unlicensed lenders and make sure to pay back your loan on time to avoid paying interest.