Lenders typically want to see employment income when they’re approving an application, but there are some lenders, such as payday lenders and cash advance apps, that are more lenient with their requirements as long as your income is stable.
Cash advance apps, like payday loans, are small, quick loans with lenient eligibility requirements.
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Lenders generally look at income to determine whether you can afford to repay a loan. Some payday lenders consider self-employment income as a valid source of income, while others do not. So if you want to take out a payday loan as a self-employed borrower, your first step is to find a lender that accepts this income.
Lenders look at stability. To increase your chances of approval, you’ll need to show evidence that your self-employment income is regular and steady enough, which you can often do by supplying 90 days’ worth of bank statements.
You will usually need to meet the following criteria in order to get a payday loan as a self-employed borrower.
Yes, it’s possible to get a payday loan if you’re self-employed with bad credit. Payday lenders place less importance on your credit score than traditional lenders. If you have a recurring income, there’s a chance of getting approved.
Payday loans are loans between $100 and $1,500 that you must repay by your next payday (up to 62 days later). The borrowing fee is $14 for every $100 borrowed, making it one of the most expensive types of loans. Only take out a payday loan as a last resort and only if you’re sure you can repay it in time.
When searching for a payday loan, consider the following factors.
Some payday lenders run credit checks, while others don’t. Those who don’t run credit checks hone in on the stability of your self-employment income and your existing debts. They may need more time to give you approval as they assess your ability to repay the loan.
Even if a lender does run a credit check, it’ll consider much more than your credit when looking at your application. Just like lenders of no credit check payday loans, it’ll also look at your income and debts — a credit check is simply an extra step. So even if you have poor credit, it doesn’t necessarily mean you’ll be denied by a payday lender that runs credit checks.
Yes, a credit check when applying for payday loans for the self-employed can impact your credit score, but it depends on the type of check. If the lender performs a soft credit check to verify your identity or offer pre-approval, it won’t affect your credit score. However, a hard credit check can cause a small (typically five points or less) dip in your score.
Most payday lenders don’t report repayment activity to credit bureaus, so repaying on time usually won’t help your credit. Always ask the lender whether they perform a hard or soft credit check before applying.
Your options as a self-employed worker aren’t limited to payday loans. Many other lenders offer loans to the self-employed, but often with stricter eligibility requirements. Depending on the lender, you may have to provide up to two years of tax returns showing consistent self-employed income.
Besides payday loans, types of lending products you can get with self-employed income include cash advance apps, credit cards, personal loans or even a mortgage.
Since payday loans are so expensive, it’s important to double-check that you can take on the additional debt load and can afford to fully pay it back. That’s especially important when it comes to payday loans, because they typically have to be paid back in full with your next paycheque.
Think carefully and check your budget first. If a payday loan will be too much for your budget, check into some of these potentially cheaper payday loan alternatives.
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.
The Yukon, Nunavut and the Northwest Territories don’t have legislation regulating payday loans at the territorial level. Payday loans are regulated in these territories at the federal level only. Find out how much lenders can charge across Canada in our full guide here.
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