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 in Ontario
- Early pay advance: Repay by your next payday or roll over
- Payday loan: Repay by your next payday
- Installment loan: Repay within 3-24 months
⚠️ Warning: Be cautious with payday loansHigh-cost payday loans are unsustainable for borrowing over a continued period of time and are expensive as a means of longer-term borrowing. If you're experiencing financial hardship call Credit Counselling Canada for free financial counselling (Monday-Friday 8:00am-5:00pm at +1 866-398-5999). You may also want to consider payday loan alternatives.
Compare short-term loans in Ontario
|Loan provider||Interest rate||Loan amount||Loan term||Key features|
|0% interest, but there is a $4.99 - $7.99/month membership fee||$30 – $150||Flexible||Instant approval and funding within 30 minutes for a small fee, no credit check|
|0%||$20 – $250||Next pay cycle||Approval is based on zero NSF fees in your bank account|
|0%||$0–$250||Flexible||Easy application, Fast funding|
|28.00% - 32.00% + broker fee||$500–$1,000||3 months||Funding within 24 hours of approval, no credit check|
|Varies by province||$100 – $1,500||7 - 62 days||24/7 approval and e-Transfer, accepts bad credit|
|Varies by province||$100 – $1,500||7 - 62 days||Convenient operating hours at store locations|
|9.99% - 46.96%||$500–$35,000||6 - 60 months||Fast application, same-day funding|
|6.99% - 46.96%||$300–$50,000||3 - 60 months||Loan broker, largest lender network|
|6.99% - 46.96%||$500–$50,000||3 - 120 months||Loan broker, pre-approval in 5 minutes|
|4.84% - 35.99%||$300–$50,000||3 - 120 months||Loan broker, bad credit is okay|
|19.99% - 39.99%||$500–$10,000||9 - 60 months||Excellent service, fast approvals|
|19.99% - 46.80%||$1,500 – $20,000||12 - 60 months||Approval in 24 hours, funding in 24 hours, accepts many types of income and bad credit|
|Varies by province||$120 – $1,500||1 - 62 days||Deposited in as soon as 24 hours (excluding weekends)|
|Varies by province||$100 – $1,500||5 - 40 days||Instant approval, e-Transfer in as little as 15 mins, accepts bad credit|
|Varies by province||$100 – $1,500||Up to 62 days||Fast funding: Within minutes via Interac e-Transfer|
Maximum borrowing costs of payday loans per provinceAlways refer to your contract for exact repayment amounts and costs as they may vary from our results.
|Province||Maximum allowable cost of borrowing|
|Alberta, British Columbia, New Brunswick, Ontario & Prince Edward Island||$15 per $100 borrowed|
|Manitoba, Saskatchewan & Nova Scotia||$17 per $100 borrowed|
|Newfoundland and Labrador||$14 per $100 borrowed|
|Quebec||Limit of 35% annual interest rate (AIR)|
Quick summary of short-term personal loans in Ontario
- Borrow $500 to $5,000.
- Repay in installments within 3-24 months.
- Pay 18% to 47% APR.
How to qualify for a short-term installment loan
Eligibility criteria for short-term loans in Ontario 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 in Ontario
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 short-term loan lenders in Ontario and what they have to offer. Be sure to consider the following to get the best loan for you:
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 $15 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 in Ontario 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 $15 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 early pay advances in Ontario
- Borrow $30 to $150
- 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 in Ontario
Requirements for small credit lines in Ontario 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 in Ontario
- Download the app or apply online. Provide your name and contact information.
- Give access to your bank statements. The lender will use your bank statements to verify your income.
- 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 in Ontario
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 46.96% APR||Short-term personal loan at 18.99% APR||Payday loan|
|Loan term||6 months||6 months||14 days|
|Interest rate||46.96%||18.99%||$15 for every $100 borrowed|
|Repayments||$95.11 per month||$88.01 per month||One-off payment of $575|
What can I use short-term loans in Ontario 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 in Ontario
- Fast access to funds. Personal loans allow you to access the funds you borrow within 24–48 hours, while payday loans offer funding in as little as one hour.
- You can apply with bad credit. Some lenders specialize in working with bad-credit borrowers and offer loans with no credit check.
- Borrow up to $5,000. With a short-term personal loan, you can borrow amounts as high as $5,000.
- Cover emergency expenses. You can use a short-term loan to pay for unexpected bills and other financial emergencies.
- High interest rates. High interest rates and fees often apply, so short-term loans are an expensive borrowing option.
- Need to be paid back quickly. Short loan terms mean higher monthly payments. If you fall behind on your payments, there is the risk of getting stuck in a cycle of debt.
- Predatory lenders. Scammers operate in the short-term loans sector, so make sure you only ever deal with legit lenders.
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. A car title loan allows 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.
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