If something comes up and you find yourself in need of fast cash, you may want to consider a short term loan.
You can apply for a quick short term loan, also known as a payday loan, even if you have bad credit or receive government benefits. You can use your loan for whatever you need, as long as it’s for legitimate purposes.
Our guide below will help you determine if taking out a short term loan is a good option for you.
⚠️ Warning: be cautious with short-term loans
If you're experiencing financial hardship and would like to speak to someone for free financial counselling, you can call Credit Counselling Canada on 1800 007 007. It's open from 8:00am to 5pm, Monday to Friday. When comparing short-term loans, ensure you take into consideration all fees, charges and interest to understand how much your loan might cost in total.
Alternatives to short-term loans
Consider these alternatives before applying for a payday loan:
Use online Government resources. The Financial Consumer Agency of Canada website demonstrates how small amount loans work – and suggests alternative options that may help you.
Payment plans. Talk to your electricity, gas, phone or water provider to see if you can work out a payment plan or receive an extension on your due date if you’re behind on payments.
Contact your creditors. Speak with creditors about extending the due date of your payment, or working out a new payment plan that works for both of you.
Seek personal loans elsewhere. Consider a small personal loan from a bank or a credit union. You may qualify for a loan with much lower interest rates than those offered by payday loan companies.
Pay with credit card. Consider paying with your credit card to cover your emergency bills or payments. This is not a long term solution, as you’ll need to pay off the balance as soon as possible, but it’s an alternative to a short term loan with high – and immediate – interest rates.
Check the websites of any lenders you’re interested in to confirm they operate in your province or territory of residence.
How quickly do short term loans work?
How fast you can receive your money depends on whether you apply online or in person at a store.
Online applicants will find filling out an application easy to do from the comfort of their own home or anywhere with an Internet connection, but they will generally have to wait at least a day for approved funds to be transferred into their bank account.
In-store applicants will have to bring all of the required documentation with them, but lenders are able to disperse funds shortly after approval in the form of cash, cheque or prepaid debit card.
The maximum amount you can apply for will depend on factors like the regulations in place for the province or territory where you reside, as well as proof that you can pay back the amount you want to borrow. There may also be restrictions on the annual percentage interest rate (APR), whether you can take out multiple payday loans at one time and if you can rollover a loan.
Quick payday loans are known for having high costs, so keep this in mind when applying. A late or missed payment could damage your credit score and end up costing you a lot of money in the form of extra fees.
What features do quick short term loans offer?
When you’re comparing loans, here are some of the features you should look out for.
Multiple options for borrowing money. There are many ways to take out payday loans in Canada, as well as a large selection of short term loans. Keep in mind that not all short term loan providers are equally quick in processing applications and releasing the loan.
Quick processing of your loan. Some short term lenders use the latest in technology to verify your credentials online and give you an answer within minutes.
Lower than normal fees. There are regulations to govern how much payday lenders can charge in fees, but some lenders charge less than others, so do your research. You may find lenders who charge lower fees and interest rates if you borrow with them multiple times, so consider this when looking for a loan.
You have a few different options when you need money quickly, including:
Short term loans. These are short-term loans that you have to repay by your next payday. The maximum amount you’re allowed to borrow and the terms of the loan will depend on a few factors including local legislation and your ability to pay the loan back.
Installment loans. With a quick installment loan you don’t have to repay the entire loan amount all in one go. You generally make equal payments over a set term, for example bi-weekly or monthly, in which can extend up to one year or more, depending on the loan and the provider.
Auto title loans. If you have a car or a motorcycle that you can use to provide security, you can consider getting an auto title loan. Your vehicle will work as collateral, but you’ll have continued access to your vehicle during the loan term.
Things to consider before applying
Here are some things to look for:
Fees and charges. Make sure you check your loan contract before accepting it, as there may be extra fees and charges you have missed. Once you accept, you’ll be liable to pay all associated costs.
Length of your loan. This will vary depending on government regulations. Ensure the loan you apply for conforms with the laws of your province or territory, as well as the needs of your budget. Longer loans accrue more interest, but shorter loans have higher payments. Only take out what you can afford to pay back.
How long until you get your cash. You’ll generally get your cash within the hour if you apply in person at a store. Applying online usually ensures the funds are deposited into your account by the next business day. Compare how long it takes for each lender to get the loan to you.
Interest rates. If you don’t need a loan immediately, be sure to compare interest rates between lenders. These vary, and it can mean spending hundreds of extra dollars if you don’t choose the loan or lender that’s right for you.
Always review a loan’s terms and conditions before accepting the contract so you know what additional fees and charges you may be expected to pay.
Jessica recently lost one of her jobs as a waitress. Her rent is due soon, and she knows she won’t be able to repay a short term loan on time. Instead, she looks for an installment loan with a low minimum.
Comparing lenders, she finds one who has a term of six months. To get the loan, she proves that she has a steady source of income – her second job as a cashier at the coffee shop – and she is financed the next day for the amount she needs to make her rent.
With six months to pay off her debt, Jessica is sure she’ll be able to find a new job in time.
Are payday loans available in my province or territory?
Payday loans are available in all provinces and territories across Canada. You should be aware that payday loans are regulated by individual jurisdictions, meaning costs and fees can vary from location to location.
Ensure that any lender you choose abides by the laws of the place you live.
At the time of writing in June 2018, the Yukon, Nunavut and the Northwest Territories do not have legislation regulating payday loans.
Frequently asked questions
You can usually complete an online short term loan application in around 10 to 15 minutes, as long as you have all of the required information on hand.
You should meet the minimum age requirement, which is usually 18 years of age, or the age of majority where you live. You should also be a permanent resident or citizen of Canada and have a steady source of income, or proof that you can pay the loan back. Some lenders have additional criteria, so be sure to compare your eligibility before you apply.
The amount of money you can borrow from a lender depends on government regulations and the lender’s policies. Most jurisdictions require a minimum age, and some lenders require you to borrow through a tiered system before they allow you to borrow the maximum amount.
There is no guarantee you’ll be approved for a loan, but short term lenders will typically want to verify your income, identity and bank account details during the application process.
Elizabeth Barry is Finder's global fintech editor. She has written about finance for over five years and has been featured in a range of publications and media including Seven News, the ABC, Mamamia, Dynamic Business and Financy. Elizabeth has a Bachelor of Communications and a Master of Creative Writing from the University of Technology Sydney. In 2017, she received the Highly Commended award for Best New Journalist at The Lizzies. Elizabeth has found writing about innovations in financial services to be her passion (which has surprised no one more than herself).
How likely would you be to recommend finder to a friend or colleague?
Very UnlikelyExtremely Likely
Thank you for your feedback.
Our goal is to create the best possible product, and your thoughts, ideas and suggestions play a major role in helping us identify opportunities to improve.
finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, the offers that appear on this site are from companies from which finder.com receives compensation. We may receive compensation from our partners for placement of their products or services. We may also receive compensation if you click on certain links posted on our site. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. finder.com compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.