Learn how to get a short-term loan in the Northwest Territories.
Payday loans are high-cost loans that can be used as a short-term fix for financial difficulties. These loans can be a quick and easy solution to make ends meet, but they should be avoided where other short-term alternatives exist.
We’ve designed this guide to help you navigate the ins and outs of cash advance payday loans in the Northwest Territories, so that you have as much information as possible before you sign on the dotted line.
Can I get a payday loan in the Northwest Territories?
Yes. Short-term loans are legal in the Northwest Territories. 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).
The Northwest Territories doesn’t regulate payday lending, which means they haven’t capped their maximum interest rates. The interest rate in the Northwest Territories currently remains capped at the federal maximum, which is $60 per $100 borrowed.
Four quick facts about payday loans in the Northwest Territories
- 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?
The Northwest Territories allows lenders to charge up to $60 for every $100 borrowed, which is the highest rate in Canada (and the max rate allowed by federal law). The table below shows the fees on a $300 payday loan, compared to the typical costs of some other types of loans for the same amount.
|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 the Northwest Territories?
Many lenders operating in the Northwest Territories offer no credit checks for those who have a bad- or poor-credit rating. Just be aware that no credit checks loans can come with higher fees and are typically offered by predatory lenders. A better solution is to find a lender willing to do a soft credit check, which won’t affect your credit rating.
What should I keep in mind before applying?
Payday loans are a particularly risky form of debt in the Northwest Territories because they’re largely unregulated. Lenders can charge up to 60% of the amount borrowed which equates to hundreds of dollars in fees and interest rates for anything over a $200 loan.
Some payday lenders may choose to charge less for a loan, 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 the Northwest Territories is legit?
It can be very difficult to tell if a payday lender is legit in the Northwest Territories since they aren’t required to follow territorial legislation or licensing requirements. Look for the following signs to make sure you’re working with a reputable business.
- The lender follows federal payday loans legislation. Stay away from lenders who charge more than $60 per $100 loan and look for providers that offer competitive rates and fees in comparison to other payday lenders.
- They don’t allow rollovers or multiple loans. The Northwest Territories 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 other parts of the country.
- They provide same-language contracts. The payday loan agreement should be written in clear, plain language that you understand. Ask the lender to explain sections of the agreement that need further clarification.
- Your contractual obligations are clear. Your payday loan agreement should list all charges, terms and conditions of the loan.
- The lender doesn’t request access to your bank account. You don’t have to supply a direct deposit form or any other information that could give lenders access to your bank account.
Watch out for online lenders
Predatory payday lenders are well-known for operating in poorly regulated provinces and territories. If you’re thinking about taking out an online payday loan in the Northwest Territories, make sure that you’re aware of the potential risks:
- Illegally high interest rates or fees. If a lender is attempting to charge rates above the $60 per $100 rate, you can rest assured that they aren’t operating above board.
- Identity theft. There have been many reports of online lenders selling customer’s personal information to third-parties, leading to identity theft and hacked bank accounts.
- Funds taken from your bank account without your permission. Some lenders take money from bank accounts illegally by using a direct deposit form.
Since the Northwest Territories doesn’t impose the same payday loan regulations as other parts of the country, there are more risks associated with borrowing short-term loans both online and in-person. Make sure to read the fine print on payday loan contracts and look for short-term loan alternatives wherever possible.
How to file a complaint against a lender
You can contact Consumer Affairs at (867) 767-9161 to file a complaint. Unfortunately, it can be difficult to prosecute payday lenders who are operating illegally or unethically, since there are very few regulations in the Northwest Territories.That being said, there’s no harm in reporting malpractice, particularly if the payday lender is charging more than $60 per $100 on your loan.
Short-term loan alternatives in the Northwest Territories
Before you agree to a payday loan, it helps to explore all of the short-term loan alternatives at your disposal.
Northwest Territories assistance programs
The Northwest Territories 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 Program provides a set amount for food, shelter, and other incidentals like clothing, child care, furniture, and educational assistance.
- Child benefit provides low-income families with monthly cash payments to assist with the costs of raising children.
- Senior Citizen Supplementary Benefit provides financial assistance to help NWT Seniors pay for living costs.
Local financial institutions
Many credit unions and local banks are trying to counteract predatory payday loan lenders by creating low-interest, short-term loan programs to help customers with unforeseen emergency expenses. Some institutions even offer credit builder programs which provide smaller loans that can help build your credit score.
If you find yourself in a cycle of debt and want some free debt management and consolidation services, you might like to consider a credit counselling program, like those on offer by the Credit Counselling Society of the Northwest Territories.
How can I apply for short-term loan?
If you’re interested in applying for a short-term loan in the Northwest Territories, 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 struggling to make ends meet and you need some help between paycheques, you should explore all of your options before settling on a payday loan. This can include asking family or friends for a short-term loan, borrowing through a line of credit from your local bank or taking out a cash advance from your credit card. If you don’t have other options, make sure to shop around to find the best deal and pay your loan off as soon as possible to avoid late payment fees and charges.