Short-Term Loans in Ontario: Compare Rates & Terms

Need money fast to pay for an urgent expense? A short-term loan could be the answer.

Short-term loans in Ontario provide quick and easy access to up to $5,000, but watch out for high interest rates and sketchy lenders. Keep reading to find out how to compare short-term loans and find one that’s legit and right for you.

Short-term loans you can get

• Cash advances
• Installment loans
• Payday loans

Compare short-term cash advances in Ontario

You pay no interest on these loans, but you may pay a monthly fee.

Compare short-term installment loans in Ontario

Access higher amounts than a cash advance by applying for an installment loan.

Compare short-term payday loans in Ontario

You’ll typically need to repay a payday loan by your next payday.

Quick summary of short-term personal loans in Ontario

• Borrow $500 to $5,000.
• Repay in installments within 3-24 months.
• Pay 18% to 35% APR.

How to qualify for a short-term installment loan

Eligibility criteria vary between lenders. Many lenders will have minimum credit score requirements, but not all – lenders that offer bad credit loans will instead consider factors like your income and current debts before deciding whether to offer you a loan.

As a general guide, you will need to meet the following criteria:

• Be 18 years old or older.
• Be a Canadian citizen or permanent resident.
• Have a steady source of income
• Have a valid Canadian bank account.

You’ll need to provide access to your bank statements to prove your income. If the lender has credit score requirements, you’ll also undergo a credit check.

Steps to get the best short-term personal loan

Rather than applying for the first loan you find, it’s worth shopping around to find a loan that suits your needs. Here’s how.

1. Find out how much you need to borrow and your credit score

First, work out how much you need to borrow to pay your expenses. Then calculate how much you can afford to repay each month. Next, check your credit score to determine which lenders you could consider approaching for a short-term loan and whether you need to take steps to increase your credit score.

2. Compare lenders

Now it’s time to compare lenders in Ontario and what they have to offer. Be sure to consider the following to get the best loan for you:

• Annual percentage rate (APR)

  Check what rates are available and what they’ll mean for your monthly repayment. Focus on the annual percentage rate (APR), which includes the interest rate plus the fees you must pay to get the loan. These fees can significantly drive up the cost of short-term loans.

• Fees not included in the APR

  Examples of fees not included in the APR are NSF fees and late payment fees. Short-term loan lenders vary in what fees they charge.

• Loan terms

  Find out how long you’ll have to repay the money you borrow. A longer loan term means a smaller monthly repayment, but it also means you’ll end up paying more interest.

• Eligibility requirements

  Read up on the lender’s eligibility criteria for borrowers. Some lenders are more lenient than others. For example, some require employment income, while others are okay with government benefits or private disability income.

• Reputation

  Research the lender to make sure they’re properly registered in Ontario. See what other customers have to say about the lender on independent review sites, and be very wary of loan offers that seem too good to be true.

3. Apply to your top choices

Some lenders offer pre-approval on personal loans, which is essentially a free quote. This can help you compare the costs of different loans, but make sure the lender doesn’t pressure you to sign with them after granting pre-approval and that they’re clear about how much the loan costs.

4. Get verified with your number one choice

Pick the best short-term loan offer and proceed with the rest of the application. In some cases, you’ll need to undergo a hard credit check as part of this process.

5. Review your contract and sign

When the lender comes back to you with a loan offer, read over the contract closely to make sure all the details are correct before you sign.

6. Get funded

The money will typically be transferred to your account within one to two business days.

Quick summary of payday loans in Ontario

• Borrow $100 to $1,500, up to 50% of your monthly pay.
• Repay by your next payday, up to 62 days
• Pay $14 for every $100 borrowed.

How to qualify for a payday loan in Ontario

Payday loans in Ontario have slightly different eligibility requirements than personal loans. Unlike personal loans, there are no minimum credit score requirements, and lenders are more likely to accept borrowers with non-employment income such as government benefits.

While the exact requirements depend on the lender, you will typically need to meet the following criteria:

• Be at least 18 years of age.
• Be a Canadian citizen or permanent resident.
• Have a steady income.
• Have a chequing account.

Steps to get the best payday loan for you

Payday loans are extremely expensive, so they should only be considered as a last resort. If you haven’t considered other options yet, check out your payday loan alternatives.

Here are some simple steps you can take to ensure you find a payday loan that suits your needs:

1. Work out how much you need to borrow and check your budget

Before you apply, don’t just work out how much cash you need to borrow but also how much you can afford to repay. Make sure you can repay the payday loan on time and still have enough money left over to pay for your other debts and expenses. If not, you could easily find yourself trapped in a cycle of debt that’s extremely difficult to escape.

2. Read up on payday loan regulations in Ontario

Familiarize yourself with Ontario’s payday loan laws. These regulations set out the rules lenders must follow, such as being transparent about the cost of a loan and never charging more than $14 for every $100 borrowed.

3. Compare lenders

Don’t just choose the first lender you find – compare a range of options to find a reliable lender with fair terms. Payday lenders must be licensed in Ontario, so check a lender’s licence number on the Government of Ontario website.

4. Watch out for scams

From charging upfront fees to tricking you into filling out fake online forms, illegitimate payday lenders pull out all the tricks to prey on unsuspecting borrowers. Check out our guide to payday loan scams for more info.

5. Read reviews

Find out what other customers have to say about their experience with a lender. But don’t trust the testimonials on a lender’s website – check out an independent review platform instead.

6. Check how you can access the funds

Find out how you’ll be able to access the money you borrow. Interac e-Transfer is the most common method, but other options include direct deposit, cash or a prepaid debit card.

Quick summary of cash advances in Ontario

• Borrow $20 to $750
• Repay on your next paycheque, or roll it over to next month
• No interest or late charges, but you may pay a monthly subscription fee
• Pay extra to get the loan faster

How to qualify for early pay advances

Requirements for small credit lines are straightforward. All you need is an active bank account and regular income paid via direct deposit, whether that’s from employment or other sources. You’ll also need to be at least 18 years old.

Steps to get a cash advance

1. Download the app or apply online. Provide your name and contact information.
2. Give access to your bank statements. The lender will use your bank statements to verify your income.
3. Get your money. You should receive funding within 3 business days or within 30 minutes if you opt for faster funding.

Can you get a short-term loan with bad credit?

Most personal loan lenders will require you to pass minimum credit score requirements to qualify for a loan, but not all of them. If your credit score is poor, there are bad credit loans in Ontario with short terms.

These lenders will consider other factors when assessing your application. These include checking whether you have a steady job that provides a regular source of income and if you have a low level of outstanding debt to your name.

However, be aware that you’ll need to accept higher interest rates than borrowers with good credit, so your loan will cost more to repay.

Tips to get approved for short-term loans

Remember the following tips to maximize your chances of approval:

• Get ready to verify your online banking. Many online lenders allow you to instantly verify your bank account online when you apply for a short-term loan. This allows the lender to confirm your identity and check an electronic copy of your bank statement, speeding up the application and approval process.
• Prepare at least two references. Some lenders will ask you to provide personal references to help verify your identity and confirm that the information you provide is correct. You may want to consider asking for references from close friends, your boss (to verify that you’re a trustworthy employee) or even your landlord (to show that you reliably pay your rent on time).
• Review your application and check for errors. To avoid a personal loan rejection, take the time to read over your application carefully to make sure all the details are correct. Even a simple spelling error can prevent a lender from verifying your identity, which could lead to your application being rejected, so don’t skip past this step.
• Enlist a cosigner if you have bad credit. If you’re applying for an Ontario short-term personal loan and you’ve got a poor credit score, consider asking someone to cosign your personal loan. If your cosigner has an excellent credit rating and regular income, you’ll increase your chances of approval. However, your cosigner will have to assume responsibility for paying back the loan if you can’t keep up with the repayments.

Can I get a short-term loan with no credit check?

Yes, you can. Some lenders that work with bad-credit borrowers in Ontario offer short-term loans with no credit check. Instead of considering your credit score, they’ll look at factors like your income and any other outstanding debts to assess your ability to repay a loan.

But be careful: some sketchy lenders target borrowers in desperate financial situations. Make sure you thoroughly research a loan provider before you apply, so you can be certain you’re dealing with a legitimate lender.

How much does an Ontario short-term loan cost?

Several factors can affect the rate you get and the total cost of your loan, including the following:

• Your credit score. You’ll be able to access lower rates if your credit score is good or better.
• Your income. If you have a steady source of income and a low debt-to-income ratio, lenders will be willing to offer you better rates.
• The loan term. The longer the loan term, the smaller your monthly repayment amount, but the more the loan will cost to repay overall.

Example: Short-term personal loan vs payday loan

To give you an idea of what to expect, let’s take a look at the cost of repaying a $500 loan (personal loan vs payday loan). As you can see in the table below, a higher interest rate makes a sizable difference to the total cost of a short-term personal loan. But the payday loan is still the most expensive option as well as the one that needs to be paid back in a very short period.

	Short-term personal loan at 18.99% APR	Payday loan
Loan amount	$500	$500
Loan term	6 months	14 days
Interest rate	18.99%	$14 for every $100 borrowed
Repayments	$88.01 per month	One-off payment of $570
Total cost	$528.06	$570

What can I use short-term loans for?

It’s entirely up to you how you use your short-term loan. For example, you might use the funds to do the following:

• Pay emergency bills
• Pay for vehicle repairs
• Pay medical costs
• Cover essential expenses

But it’s worth remembering that short-term loans are expensive to repay. So while you can use them for just about anything, you should only take out a short-term loan for financial emergencies.

Can I get a short-term loan in Ontario with guaranteed approval?

No. Before approving any loan, a lender must assess your financial situation to determine whether you’re able to repay the amount you want to borrow. If a lender claims to offer guaranteed loan approval, be wary. This is a warning sign that could indicate a personal loan scam, so proceed with caution.

Summary: Pros and cons of short-term loans

Other ways to borrow money

Before deciding whether a short-term loan is right for you, make sure you consider the following alternatives:

• Credit card cash advance. A credit card cash advance allows you to withdraw money from your card balance. It’s a quick and easy way to access cash, but they typically attract a higher interest rate than purchases on your card and you’ll often also have to pay a cash advance fee.
• Car title loans. Car title loans in Ontario allow you to borrow up to 50% of the value of your car. It offers fast access to funds and you can qualify even if you have poor credit, but you’ll need to watch out for high rates and fees. And because your car is used as collateral for the loan, it could be repossessed if you can’t make your repayments.
• Line of credit. If you’re approved for a line of credit, you can withdraw cash up to a predetermined limit whenever you need funds. You only pay interest on the money you withdraw, and rates are usually lower than credit card interest rates. However, make sure you check the fine print to find out what fees apply.

Frequently asked questions

• Do short-term loans affect your credit score?

  Applying for a short-term personal loan could affect your credit score. Multiple applications can result in several hard inquiries on your credit file in a short time, which can push your score lower, but paying off the loan on time and in full could boost your score. Payday loans usually don't affect your credit score because payday lenders don't report your payments to the credit bureaus.

  Defaulting on a personal or payday loan can decrease your credit score.

• What credit score do I need to get approved for a short-term loan in Ontario?

  Credit score requirements vary between lenders. While some lenders want borrowers with a good credit score of 660 or above, there are also lenders that specialize in loans for people with bad credit. Some don't require a credit check to approve short-term loan applications.

• What are the signs of a legitimate lender of short-term loans in Ontario?

  A legitimate lender will be registered in Ontario and be transparent about the cost of a loan. They won't use high-pressure sales tactics or offer guaranteed approval. They will also have a physical address for their head office and be easy to contact via phone and email. Payday lenders must also be licensed with the Government of Ontario.

• Are there no refusal short-term loans?

  No. Be wary of lenders advertising "no refusal" because they may not be legitimate. Learn more about no refusal loans.

• Can I get a second payday loan in Ontario before paying off the first one?

  No. In Ontario, payday lenders cannot issue you another payday loan if you already have an outstanding payday loan with that lender. The rules also restrict loan brokers from arranging concurrent payday loans through different lenders.