Now you can listen to our blog post, "Government Assistance Programs in Canada" while on…
Now you can listen to our blog, “Payday Loans for Unemployed on Benefits in Canada” while on the go.
If you’re on benefits in Canada and need a payday loan, you might be wondering if a payday lender will approve your application? The answer is Yes. A lot of payday lenders will take government aid as payment. However, note here that although payday loans are the “easiest” loans to obtain, they come with excessive fees and should be utilized only as a last resort.
Other types of jobless loans accessible in Canada include installment loans, lines of credit, and vehicle title loans. Unemployed borrowers with poor credit may be eligible for any of these loans. If you have a steady source of income, such as benefits, lenders will consider you.
Payday loans for benefit recipients have certain characteristics.
- Approval is quick and simple: Even if you’re unemployed and on benefits, many payday lenders can approve you and offer you money the same day.
- It’s fine if you have bad credit: Even if you have a low credit score, you may still get approved. Many lenders claim that people with poor credit can be accepted.
- Amounts of loans: Payday loans are available in amounts ranging from $100 to $1,500.
- Term of the loan: Payday loans are usually returned on the next payday (1 to 4 weeks).
- The borrowing length is limited to 62 days: Benefits are enough in terms of income. If you’re on benefits and unemployed, several payday lenders can help you get a loan. This includes things like unemployment insurance, disability, and pensions, among other things.
- Various funding alternatives are available: You can get your payday loan via e-transfer or direct deposit if you apply online. You can receive your loan in-store using cash, a prepaid debit card, or even an e transfer. If you have an emergency and need money right away, especially if it’s after business hours, the fastest option to receive money online is through lenders who offer e-transfer payday loans 24 hours a day, 7 days a week.
What to Be Aware Of
- The interest rate is rather high: Payday loans involve exorbitant interest rates ($15 $25 each $100 borrowed), thus they should only be used as a last resort.
- Repayment terms are short: Payday loans don’t allow debtors many opportunities to recoup their finances because of their short repayment durations.
- Lenders take advantage of their clients: Because unscrupulous lenders are common in the payday loan industry, choose a reputable lender.
What to Think About Payday Loans for Benefits Recipients
Payments are made automatically. Because you don’t have to remember to make your payments manually, lenders like to promote debiting directly from your bank account as an advantage. However, if you don’t have the funds to repay your loan, your bank account may get overdrawn, resulting in further costs. Make sure you have enough money in your account on the due date, otherwise your loan could cost you much more than you anticipated.
Other conditions must be met. You must be the age of majority in your province or territory and a Canadian resident, in addition to having a consistent income. You’ll be asked for your address, contact information, and Social Security number (SIN). References may be required by some payday lenders.
Other types of unemployment loans available in Canada
You don’t have to rely on payday loans. Other types of jobless loans in Canada are listed below.
A type of loan that is repaid over smaller loan amounts, shorter loan durations, and higher interest rates characterize this sort of personal loan. However, not all lenders offer installment loans to benefit recipients who are unemployed.
Compare lenders who provide this service.
Lines of Credit: You might not be eligible for a bank line of credit, but you might be able to receive one from an online lender.
Compare credit lines.
Vehicle Title Loan:
These are secured loans in which your automobile is used as security. To learn more about vehicle title loans, click here.
Why Installment Loans?
If you’re unemployed and receiving benefits, some installment loan providers may consider you. Here are some of the reasons why you should take installment loans.
- Amounts of loans. Installment loans are typically between $500 and $10,000.
- The repayment schedule is predictable. You’ll work with your lender to determine how much you owe and when you’ll pay it back. You may plan and budget accordingly with these fixed terms.
- Conditions of the loan Term lengths typically range from 6 months to 5 years. There are no consequences for paying in advance. No Prepayment Penalties: You may be able to pay off your loans early without any penalties if you do so with some lenders.
- Bad credit is taken into account. If you’re unemployed with benefits and have a credit score below 560, you might be able to acquire an installment loan.
What to Be Aware Of
- The interest rate is high. If you have bad credit, you may be subjected to a high-interest rate.
- Check your credit score. Your credit score will be scrutinized by lenders.
Why Lines of Credit?
- Open Term: You can pay off your loan in part or in whole at any time, unlike a payday loan or an installment loan. A flexible term allows you to pay back the loan when your financial situation improves.
- Take out a loan up to your credit limit: You can take out as much or as little money as you like up to a certain limit.
- It could be less expensive than a payday loan: Mogo, for example, claims that their MogoMini line of credit is 88% less expensive than a payday loan.
- Benefits are acceptable: Benefits are not accepted as a viable source of income by all line of credit providers, but a few do.
What to Be Aware Of
- The interest rate is rather high. The interest rate on a loan might be as high as 47%.
- Waiting too long to repay: When a loan has an open term, it’s tempting to just pay the interest and put off repaying the loan. However, if you wait too long, you may end up paying more interest than if you had taken out a payday loan.
- Overspending: It’s simple to borrow more money than you need when you have ready access to money.
In Canada, how can you acquire an unemployment loan?
- Consider the following steps when looking for jobless loans in Canada: Before you apply, be sure you meet the requirements. Make sure you’re eligible for the loan you’re seeking before you fill out an application. Lenders will specify the particular criteria you must satisfy to qualify, such as a minimum income and credit score.
- Make a request for a copy of your credit report. Check your credit report for free with the credit bureaus in Canada to see what rates you might qualify for.
- Before you apply, weigh your alternatives. Even if you believe your alternatives are restricted, you should browse around before choosing the best loan for you. There may be differences in interest rates or penalties and fees between bad credit lenders.
- Prepare your documentation ahead of time. You’ll have to show documentation of your benefits income as well as government-issued identification.
There are many payday loans available to benefit recipients who are unemployed; but, before taking out a payday loan, be sure you can repay it by your next payday to avoid becoming trapped in a debt cycle.
Remember to weigh all of your alternatives in order to choose the best loan for your circumstances.
The Bottom Line
At Lionsgate, we specialize in helping people obtain funding private mortgages for land purchases as well as for other real estate transactions. If you are looking to buy land in Canada, get a mortgage or apply for a loan, leave us a message and we will try to connect you with local realtors and sourcing for financing.
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