Now you can listen to our blog post, "Loans While On Employment Insurance Benefits" while…
Now you can listen to our blog, “Loans on Disability Income in Canada: Payday, Instalment & Vehicle Title Loans” while on the go.
Looking for loans on disability income in Canada? Well, you have a few options: Payday loans, instalment loans and vehicle title loans. A payday loan, however, is the most common and viable option to consider. Fortunately, there are payday loans that accept disability income in Canada.
Before you move further, note down that all these disability loan options are expensive and can create problems for you. So, consider them only as your last resort.
Below are disability loans with no credit checks and what you need to consider before applying.
Payday Loans for Disability Income Canada
Payday loans for disability income are short term loans offered to people whose incomes come from social assistance program benefits. In Payday loans, the primary source of income is the disability payment of the borrower.
Approximately a payday loan of $1500 is enough to pay your bills, replace or repair damaged goods, pay medical expenses or any other type of emergency you or your family is facing.
PayDay loans can also be used as a cash advance from your paycheck with no limitations. The very idea of a Payday loan is to provide financial assistance, no matter what your source of income is government benefits.
So, when getting a disability payday loan, it is important to make sure you are going with the right lender. Usually, direct lenders are preferred as the person with disability wishes to handle the entire process from home.
What Do You Need to Know Before Applying for Payday Loans?
As mentioned already, Payday loans have extremely high-interest rates and should only be used as a last resort. Also, while you have a lot of options for payday loans in Canada that take disability payments, not all payday lenders are the same. The payday loan industry as a whole is known for being predatory. It is critical to find a lender who follows provincial legislation and assesses your ability to repay a loan appropriately.
Payday Loans for Disability Income Eligibility Requirements
Lenders’ specific requirements will vary, but in general, you’ll need to:
- Be of legal age in the province or region where you live (either 18 or 19 years old)
- Be a Canadian citizen or a permanent resident of Canada.
- Live in a province or region where your lender has authorization
- Have a stable source of income (you may have to provide disability income pay stubs or bank statements from the past several months)
- Have a Canadian chequing account where you may deposit funds (some short-term lenders may allow you to pick up cash at a branch location if the amount isn’t too huge).
- Provide your contact information (your name, home address, phone number, and email address)
Other Loans for Disabled Individuals
Payday loans aren’t the only way to get money. Disability benefits may be accepted as a type of income by some instalment loans and vehicle title loan providers. They may, however, have more stringent eligibility conditions than payday loans.
Instalment loans: A type of loan that is repaid over Smaller loan amounts, shorter durations, and higher interest rates characterise this sort of personal loan.
Vehicle Title Loans: Your automobile serves as collateral for this loan. The lender has the right to repossess your vehicle if you do not make your payments. Keep in mind that car title loans have extremely high-interest rates.
Features of Installment Loans
- Rates of interest: Depending on your credit score, loan provider, and other personal criteria, interest rates might range from 8% to 47%. Borrowers with poor credit are more likely to be charged higher interest rates.
- The repayment schedule is consistent: Determine the amount and frequency of your loan repayments with your lender. You may plan and budget accordingly with these fixed terms.
- Amounts of loans: The loan size range varies depending on the lender, however, most instalment loans are between $500 and $10,000.
- Loan Term: Conditions of the loan Term lengths typically range from 6 months to 5 years.
- No Prepayment Penalties: There are no consequences for paying in advance. You may be able to pay off your instalment loan early without incurring any costs, depending on the lender.
- Bad Credit: Even if your credit score is less than 560, you might be able to get an instalment loan.
Features of car title loans for people on disability
- Your car is a security deposit. You can keep driving your automobile, but if you don’t pay your bills, you risk losing it.
- It’s fine if you have bad credit. Borrowers with a credit score of less than 560 can apply for this loan.
- Loan terms are longer than payday loans. A longer loan term allows your finances to recover more quickly (but the longer the term, the more interest you pay).
- Interest rates are extremely high. Interest rates on car title loans can be as high as 29%.
- There will be no credit check. A credit check is not required for some automobile title loans. Instead, the lender will concentrate on the consistency of your income.
Will taking out a loan have an impact on my disability payments?
Loans aren’t considered income and aren’t normally deducted from your disability payments. However, there are two scenarios that may have an impact on your payments:
You are given money as a present. If you are given money that you are not required to repay, the government considers it a gift and records it as an asset. This could push you over the individual resource limit, making you ineligible for benefits for that month.
You don’t immediately spend the money you borrowed. When you get a loan, you normally have to pay it back within the month you get it. Anything left over may be counted against your resource limit, making you ineligible for benefits.
Make sure you don’t go over your personal resource limit in these situations. To prevent taking on too much debt or having too much money in the bank when your monthly resources are calculated, only borrow as much as you need.
Will I have to pay a higher rate since I’m disabled?
Lenders cannot lawfully discriminate against you because you have a disability. The interest rate you pay will be determined by all aspects of your loan application, including your total income (which may include sources other than disability benefits), your credit history, and other criteria.
If your income is modest and you have fair or poor credit, lenders may view you as a larger risk and will charge you a higher interest rate to compensate. Keep in mind that the APR stated by lenders is usually a “representative” APR, which means that while the majority of individuals who get a loan will get a rate close to this, not everyone will.
You May Also Like: Mortgage Gift Letter: Everything Canadians Need to Know
When you’re on disability, there are still lending choices accessible, despite your low income. If borrowing isn’t the best option for you, look into other grant and benefit options.
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