Loans you can get if you’re unemployed in Canada
Find out where you can apply for payday loans, plus see your other options for unemployment loans.
If you need a loan while unemployed in Canada, you may be wondering whether a lender will consider your application. The answer is yes, some lenders accept benefits as a form of income. Beyond getting payday loans for the unemployed while on benefits, you may also be able eligible to apply for installment loans, vehicle title loans and lines of credit.
Payday loans are one of the quickest and easiest loans to get approved for, but they are very expensive, so be sure to consider alternatives.
⚠️ 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.
Payday loans for unemployed on benefits in Canada
With a payday loan, you can borrow up to $1,500 in as little as 1 hour. People with bad credit can apply.
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)|
Features of payday loans for unemployed on benefits
- Quick, easy approval. If you need an emergency loan and you’re unemployed on benefits, you can get instant approval with a payday loan and funding within a few minutes after approval via e-transfer.
- Bad credit is okay. Instead of focusing on your credit score, lenders focus on your unemployment benefits.
- Borrowing fee. Depending on where you live, you’ll pay between $14 to $17 for every $100 borrowed.
- Loan amounts. You can borrow between $100 and $1,500. Some provinces limit the amount to a percentage of your income (50% in Ontario, BC, Saskatchewan and Newfoundland and 30% in Manitoba and New Brunswick).
- Loan term. Payday loans in Canada have a maximum loan term of 62 days. Also, payday loans in Alberta have a minimum loan term of 42 days.
- Benefits are okay. Many payday lenders can offer payday loans if you’re unemployed on benefits. This includes employment insurance, disability, pension, social assistance and more.
- Different funding options. If you apply online, you can get your payday loan via e-transfer or direct deposit. If you apply in-store, you can get your loan via cash or e-transfer. If you have an emergency and need funds fast, especially if it’s outside business hours, the fastest way get your funds online is through lenders that e-transfer payday loans 24/7.
What do I need to get approved for payday loans while unemployed?
To get approved for a payday loan while unemployed using your benefits, you’ll need the following:
- Be the age of majority in your province or territory (either 18 or 19).
- Have a recurring benefits income.
- Have a chequing account.
Documents you’ll need to provide
While requirements for payday loans while unemployed vary among lenders in Canada, you generally need the following:
- A copy of government-issued ID, such as a driver’s licence or passport
- Proof of income, such as bank statements
- Voided cheque or pre-authorized debit form
Before you sign up for a payday loan using your unemployment benefits
- Check for a licence. Make sure the lender is licensed in your province and follows all government regulations.
- Have a concrete repayment plan. Check you’ll have money in your bank account to repay the loan. Otherwise, you’ll be charged a late fee and NSF fee. Also make sure you’ll have enough benefits left over to pay for other debts or expenses after you repay your loan. If you don’t have enough benefits left, you might be inclined to get another unemployment loan.
- Know the cost of payday loans. They’re one of the most expensive ways to borrow money with annual percentage rates (APRs) in the triple digits.
Other types of loans for the unemployed in Canada
Payday loans are not the only financing option if you’re unemployed and on benefits in Canada. Consider less expensive unemployment loans below.
- Installment loans. These are a type of unsecured personal loan with smaller loan amounts, higher interest rates and more lenient requirements than traditional personal loans. Not all lenders offer installment loans for the unemployed on benefits. Skip ahead to installment loan options.
- Lines of credit. You may not qualify for a line of credit from a bank, but you may be able to get one from an online lender. Skip ahead to line of credit options.
- Vehicle title loans. These are secured loans where you use your vehicle as collateral. Skip ahead to vehicle title loans.
Installment loans for the unemployed in Canada
With an unemployment installment loan, you can typically borrow up to $10,000 within 24 to 48 hours.
Features of unemployment installment loans
- Benefits are a valid source of income. Lenders can consider your application as long as your benefits income is steady.
- Loan amounts. You can typically borrow between $500 and $10,000.
- Loan terms. Term lengths often last between 3 months and 5 years.
- Payment schedule. You can make your payments monthly, bi-weekly, semi-monthly or weekly, depending on the lender.
- No prepayment penalties. Most lenders allow you to pay off your loan early without any penalties, so make sure you pick one that allows this.
- Bad credit is considered. It’s possible to get an installment loan if you’re unemployed with benefits and have a credit score below 560.
Before you sign up for an unemployment installment loan
- Know how much you’ll pay in interest and fees. This type of unemployment loan in Canada has high interest rates up to 47%.
- Examine the payment schedule. Know how much of your payments will go towards paying the interest vs. reducing the principal.
- Check the lender’s reputation. Visit consumer review sites like Trustpilot and the Better Business Bureau to make sure the lender hasn’t received a strong pattern of customer complaints.
Lines of credit you can get if you’re unemployed on benefits
With a line of credit for the unemployed, you can typically borrow up to $10,000 within 24 to 48 hours.
Features of lines of credit
- Open term. You don’t have to pay off the loan by a certain date, but you do have to make a minimum payment each month. A flexible term allows you to repay the loan when you’re in a better financial position.
- Borrow up to your limit. This type of unemployment loan allows you to borrow as much or as little you want up to a predetermined limit.
- Potentially cheaper than a payday loan. For example, Mogo says its MogoMini line of credit is 88% cheaper than a payday loan.
- Benefits are okay. Not all line of credit lenders accept benefits as a valid source of income, but there are a few that do.
Before you sign up for an online line of credit while unemployed
- Check how much you’ll pay in interest and fees. Online lines of credit have high interest rates up to 47.42%.
- Analyze the payment schedule. Just like with installment loans, know how much of your payments will go towards paying the interest vs. reducing the principal.
- Check the lender’s reputation. See if the lender has received any customer complaints, and what those complaints are about.
- Have a concrete plan for repaying the full balance. With an open term, it can be tempting to make just the minimum payment and hold off on repaying the whole unemployment loan. But if you wait too long, you could end up paying more interest than a payday loan or installment loan. It’s best to pay off what you borrow as soon as possible.
- Watch out for overspending. With easy access to funds, it can be tempting to borrow more than you need.
Car title loans for the unemployed in Canada
A cat title is another type of unemployment loan in Canada where you can borrow 25% to 50% of the value of your car within 24 to 48 hours.
Features of car title loans for the unemployed
- Your car is the collateral. You must own the car, but you can keep and continue to use it. If you default on your loan, the lender can repossess your car to recoup its losses.
- Loan term. The loan term ranges between 3 and 60 months.
- Loan amount. Borrow up to 50% of the value of your car.
- Bad credit is okay. This loan is available to borrowers with poor credit.
- Other vehicles are okay. Motorcycles, boats, RVs, trailers and heavy-duty equipment may be used as collateral.
Before you get a car title loan while unemployed
- Know how much you’ll pay in interest and fees. Like other unemployment loans in Canada, watch out for high interest rates up to 49%.
- Watch out for extra fees. Watch out for lenders advertising a low interest rate but you’ll need to pay other fees like a vehicle evaluation fee, title search fee and registration fee to get the loan, which will significantly drive up the cost of your loan.
- Watch out for no credit checks. Lenders conduct credit checks to evaluate a borrower’s ability to manage a loan. If a lender doesn’t do credit checks, there’s a chance you’ll get approved for a car title loan you can’t afford, which can then cause you to lose your car.
- Have a concrete repayment plan. Make sure you can manage the repayments, because as mentioned before, there’s a risk of losing your car.
How to get an unemployment loan in Canada
When searching for unemployment loans in Canada, consider the following steps:
- Check the eligibility criteria before applying. Before filling out an application, make sure you’re eligible for the loan you’re applying for. Lenders often list their requirements, such as minimum income and minimum credit score.
- Order a copy of your credit report. Check your credit report for free with one of Canada’s credit bureaus (Equifax and TransUnion) so you have a good read of how your application will look to lenders.
- Compare options before applying. While you may think your options are limited, you should still comparison shop before deciding on the best loan for you. You may find varying interest rates or disparities in charges and fees between bad credit lenders.
- Have documentation ready. No matter which unemployment loan you apply for, you’ll need to provide proof of your benefits income and government-issued ID.
How to compare loans for the unemployed in Canada
With several options available to you, how do you choose which unemployment loan is best for you? Ask yourself the following questions when weighing your options:
- Which loan can I afford? Can you afford to repay a payday loan within a few days or a few weeks, and when you do, will you have enough income left over to pay for other debts? If you get an installment loan, how much of a monthly repayment can you manage? Can you repay money borrowed from a line of credit before it gets too expensive?
- Are there extra charges? Check whether there are costs in addition to the interest rate, such as origination fees (a processing fee) and prepayment penalties.
- What is the reputation of the lender? Read reviews from people who have taken out a loan from the lender. If you see any consistent complaints, you might want to go with another lender.
- How fast do I need the loan? If you’re looking for an emergency loan, then you might prefer payday loans. Payday loans have rapid turnaround times because of their flexible eligibility requirements and simple application processes.
Are there guaranteed loans for the unemployed in Canada?
There are no guaranteed loans for the unemployed in Canada. Legitimate lenders do not guarantee approval and will first evaluate your financial situation, such as your income and debts, before approving. Steer clear of lenders guaranteeing loans for the unemployed because it could be a scam, predatory or have fine print that actually doesn’t make them guaranteed. This can put your personal information and/or finances at risk.
If you need a loan with lenient eligibility requirements, learn about easy loans in Canada.
Can you get instant online loans while unemployed in Canada?
Yes, you can get instant online loans from several payday loan providers in Canada who accept unemployed benefits as income. These online lenders are often able to assess your application, give approval and e-transfer your loan money directly into your bank account in as little as 2 minutes up to 15 minutes. Some example payday loan lenders that can provide these types of instant online loans for the unemployed are iCASH and Cash Money.
How to increase your chances of approval for unemployment loans in Canada
If you’re unemployed and need a loan in Canada, you might consider applying with a guarantor or cosigner — like a partner, relative or friend — in order to boost your chances of approval. Many lenders offer the option for joint applications, and some lenders even encourage you to apply with a guarantor in order for you to be eligible for a larger loan amount. However, this is a large responsibility for the guarantor or cosigner who is essentially signing up to share the responsibility of repaying the loan.
Are there free online loans for the unemployed?
There are no free online loans for the unemployed. Most loans come with an interest rate that serves as the cost to take out a loan with a lender. There is such a thing as 0% financing if you’re making a specific purchase like a car, electronic or furniture, but this is subject to approval based on your financial situation.
How do I know a payday loan is legit?
There are several ways to determine if a payday lender is legit.
- Check that the lender is provincially licensed to operate.
- See if the lender is transparent about fees.
- Check that the lender abides by the provincial regulations for payday loans.
- Read reviews about the lender.
There are many loans for the unemployed on benefits in Canada. Before taking out an unemployment loan, whether that’s a payday loan, installment loan, vehicle title loan or line of credit, understand the costs of the loan and have a concrete strategy to repay it.
Frequently asked questions about loans for the unemployed in Canada
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