Bad Credit Personal Loans in Canada

March 10, 2019 By Samantha 82 Comments

This post has been updated on Mar. 10^th, 2019 to reflect new developments in the Canadian credit markets for people with less then perfect credit.

I receive many request daily from people who want to borrow small amounts of money short or medium term, people who usually have nobody else to turn to because they have bad credit. It breaks my heart reading these requests, but I’m not in the business of lending money and unfortunately I can’t help them out. The way I’m trying to help out is by educating people to avoid debt whenever possible, or at least to use forms of credit that won’t cripple them financially down the road. I understand that when you have a poor credit and the rent is overdue, or you have an emergency, sometimes you have to bite the bullet and borrow from a private lender that demand high interest on their loans, but such bad credit loans should be dealt with swiftly to avoid going into a never ending debt spiral.

I see signs of restricting personal credit in Canada everywhere lately. Even secured credit card providers like Peoples Trust has discontinued their popular secured card this summer. The big five Canadian banks have tightened credit issuing and mortgage underwriting. Getting a personal loan if you have a bad credit is no longer an easy task in Canada. You can still get a small bad credit personal loan from alternative lenders, but they come with much higher interest attached, and should be used only as last resort.

Although many Canadians would hate to admit it the real estate boom of the last 15 years is now over. This is not a real estate post, but the fallout of the declining real estate has direct implications on the ability of the average Canadian to access personal credit. The first victims of declining real estate values are of course people who rely on home equity lines of credit and refinancing to pay their bills and expensive to service credit card debt. The rising interest rate environment that we find ourselves in isn’t helping this either.

Finance companies, credit unions, online lending services, and some banks offer secured and unsecured loans to Canadians with bad and no credit. They usually offer short-term loans and a convenient and fast application process.

Getting a Bad Credit Personal Loan in Canada with No Credit Check

Online lending services and payday lenders offer loans for people with bad credit with no credit check. Some finance companies don’t run a credit check but require regular and stable income and look at the customer’s individual circumstances. Another option is to apply for a home equity or secured auto loan whereby your home equity or vehicle serves as collateral. Other loan providers include peer to peer lending services and payday lenders. Peer to peer services feature loans offered by individual lenders who may be more sympathetic and willing to offer loans to individuals with fair or poor credit.

Is There Such a Thing as Guaranteed Approval for Bad Credit Personal Loans

While many lenders advertise guaranteed approval, they usually require proof of income. In many cases, customers must have an active checking account. Guaranteed approval usually means that lenders accept applications from clients with a history of consumer proposals, bankruptcies, credit counseling, seriously delinquent accounts, and past collections. Thus loan providers have more lenient lending and credit requirements compared to banks. Guaranteed approval often means that loan providers accept applications from individuals with different credit profiles, and your credit score is not the most important factor.

How to Get Unsecured Personal Loans with Bad Credit

Comparison shopping is the best way to check rates, lending criteria, types of loans available, acceptable types of collateral, repayment schedules, and other details. Lending services usually request employment information such as length of employment, position held, gross income, monthly income, and employer. If applying together with a co-applicant, they must provide employment and personal information about the co-applicant, including net or gross income, age, and marital status. When applying for a bad credit personal loan in Canada, applicants also provide information such as mortgage payments and mortgage holders, number of dependents, current address, age, and social insurance number. Lenders want to make sure that customers will be able to pay down the loan within the agreed time frame. As a rule, loan providers are unwilling to deal with risky clients with no credit or financial record. This is the reason why they ask for proof of employment and financial stability to ensure prompt repayment. Customers with poor credit and excessive debt, for example, are at risk of default.

Top 5 Bad Credit Personal Loans Lenders in Canada

EasyFinancial, Capital Direct, Prudent Financial, Canada Lend, and Tribecca Finance are the top 5 lenders that offer secured and unsecured loans to individuals with poor credit.

EasyFinancial, for example, offers home equity and personal loans to customers who need cash to pay unexpected or medical expenses, pay a consumer proposal, or consolidate existing loan balances. The company also offers consumer loans to help borrowers repair or establish credit. Customers are offered home equity loans with long amortization periods of up to 40 years. EasyFinancial offers debt consolidation and personal loans to help clients reestablish credit. Clients are offered a bad credit personal loan of $500 to $10,000. The company advertises flexible and convenient payment options.

Capital Direct is another lending service that provides home equity loans and lines of credit to pay one-time, recurring, or unexpected expenses. Borrowers are offered lines of credit with variable repayment schedules and rates and debt consolidation options.

If you are looking for a bad credit loan in Canada, Prudent Financial is a good place to find small loans of up to $5,000. Approval depends on factors such as assets, debt, income level, and employment. The good news is that payments are reported to Experian, Equifax, and other credit bureaus.

Canada Lend is yet another lending service that offers second and bad credit mortgages, debt consolidation services, home equity lines of credit, refinancing options, and other financial solutions.

Secured Bad Credit Loans

Issuers provide secured loans to customers with bad and good credit. Loans are offered to borrowers with defaults, mortgage arrears, foreclosure, and missing loan payments provided that collateral is used to secure the loan. Collateral in the form of caravan, motorcycle, vehicle, real estate, or another valuable asset is required to secure the loan. Lending services advertise flexible repayment terms and schedules, easy application, and pre-approval options. The repayment term varies based on the borrower’s financial circumstances. The main benefit is that clients are offered larger amounts and lower rates compared to unsecured loans. At the same time, many lenders require that applicants are homeowners to qualify. The maximum loan to value ratio varies by issuer. When applying for a bad credit personal loan in Canada, clients fill in contact information, marital status, mortgage balance, collateral worth, amount requested, and other information. Some financial companies also ask about pay interval and employment (self-employed, student, housewife, employed, etc.)

Unsecured Bad Credit Loans

Some issuers offer unsecured credit in the form of short term loans with higher-than-average rates. There are loan providers that offer acceptable solutions but it is more difficult to get approved. One idea is to apply together with a co-signer. This can be a friend, relative, parent, coworker, or another person with good or stellar credit. Co-signers are 100 percent responsible for timely loan repayment and are taking a huge risk. It is also possible to get approved for a loan with less than perfect credit provided that you have stable income. Writing a loan application letter also helps. Include details such as repayment term and schedule and loan purpose and explain your financial situation. When applying for a loan, customers are asked to bring documents such as their financial and loan statements and income tax forms. Lenders are also interested in the applicant’s housing history, employment status, credit card debt, and outstanding loan balances. Customers also choose a loan term that can vary from 3 months to 10 years. They specify loan amount and purpose, for example, vehicle or furniture purchase, debt consolidation, home improvements, and others. Some lenders also offer loans for back to school expenses, funeral expenses, small rent arrears, holidays and travel, Christmas and wedding expenses, and unexpected expenses. With some lenders, you need to provide housing information, i.e. tenant of employer, housing association, living with parents, furnished or unfurnished tenancy, or homeowner.

Should I Get a Payday Loan Online

February 4, 2015 By Samantha 2 Comments

People take out payday loans for a variety of reasons, but mostly to cover emergency expenses such as urgent home and vehicle repairs, household appliance repairs, electrical problems, outstanding bills and others. With rising prices and inflation, more and more Canadians are struggling to keep ends meet. Cash loans help borrowers pay bills and avoid late payment penalties and charges.

What Are Online Payday Loans?

A payday loan is a form of short-term financing repaid when the customer gets his next paycheck. Consumers are asked to write a post-dated check as a guarantee of timely repayment. Some lenders offer small loans with very high interest rates and terms varying from 2 weeks to 2 months. The easiest way to apply for an instant loan is online. Many providers advertise no credit check, online applications, and instant or quick approval. It takes days and even weeks to get approved for a regular loan, and banks usually require a solid credit history to get approved. This type of short-term loan is offered to individuals who need urgent cash. It is a last resort for debtors who have exhausted all other options for financing. On the downside, the high interest rate adds to the cost of borrowing, meaning that consumers pay a lot in fees and charges. Another problem is that this is a temporary solution and not a long-term solution to major financial problems. On the good side, short-term loans are convenient and easy to qualify for. There are established and reliable providers, from small establishments to franchise and large chain providers. Some providers actually operate much like brick-and-mortar banks. Many issuers offer handy tools such as status updates, account reminders, due date notifications, extension notifications, and others.

What You Need to Know When Applying for Payday Loans Online

Providers offer loans to individuals who are employed, have a checking account, and are of the age of majority. Proof of income is required as a guarantee of payment. Customers fill in their contact and personal information, including their mobile and home phone, time to call, time at current address, and whether they own or rent. Identity verification information may be required as well. With some providers, clients are asked if they are currently considering or filing for bankruptcy. Note that the due date and other details are included in the agreement. Late payment fees apply in case of failure to pay by the due date. Consumers who apply for an online payday loan write a check for the amount requested and sign an agreement. They also pay a fee for the service provided. Once the loan has been paid off, clients are free to reclaim the check. The fees, repayment terms, and rates vary by location.

What Is the Law in Canada Regarding Payday Loans?

Cash loans are legal in many Canadian provinces, and providers operate in accordance with provincial regulations regarding interest rates and fees. The maximum charges and fees vary by province but there are caps on the rates charged by providers. Manitoba has enforced restrictive caps, with lenders charging rates of up to 17 percent of the principal. In contrast, Nova Scotia set caps at 31 percent. Saskatchewan, Alberta, and British Columbia have set the maximum rate at 23 percent. Payday loans are prohibited by law in Quebec and Newfoundland. The cap is set at 25 percent in Prince Edward Island and Nova Scotia. Under federal law, the cap is at 60 percent meaning that the annual rates are limited to 60 percent. Bill C-26 was enforced to change the criminal interest rate and addresses loans by organized crime and predatory lenders. Basically, rates above 60 percent are criminal under section 347.1 of the Canadian Criminal Code. Borrowers are also protected under the Canadian Payday Loans Act which prohibits rollover loans and sets interest rate caps. In addition, the contract can be cancelled within two workdays without incurring penalty charges. In accordance with the Payday Loans Act, lenders are required to disclose information such as the interest charges (what you will pay), the term or length of the amount borrowed (number of days). These details must be present in the financing agreement. Providers must not accept or request payments by means of automatic deduction. Lenders are not allowed to contact acquaintances, neighbors, friends, and family members at any time. They are prohibited from using excessive pressure, threatening language, and other abusive and intimidating practices.

Canadian Payday Loan Providers

There are established Canadian fast loan providers such as Money Mart, Zippy Cash, Maple Loans, and others.

Maple Loans

Maple Loans offers short-term loans to applicants who meet the minimum income requirements and are Canadian residents. The interest rate and amount offered depend on the customer’s individual circumstances. Consumers are asked about their employment history, including pay frequency, length of employment, monthly net income and job title, next payday, and so on. Clients also fill in banking information such as type of account, bank account number, institution number and name, as well as transit number and time at bank.

Zippy Cash

This is another instant loan provider that advertises instant approval, online application, and cash conveniently and safely deposited into the customer’s bank account. The loan amounts vary from $500 to $1,500. A point system is used to determine the amount customers qualify for. Early repayment options are available, and there are no early prepayment penalties. Individuals who are unable to repay their loan are offered alternative repayment arrangements. Persons who fail to notify the provider may face collection procedures.

Money Mart

Money Mart offers loans to individuals in six provinces – Saskatchewan, Ontario, Nova Scotia, New Brunswick, British Columbia, and Alberta. The loan amounts vary from $120 to $1,500. The interest rates vary by province. For example, borrowers pay $17 per $100 in Manitoba, $23 per $100 in British Columbia, $21 per $100 in New Brunswick, and $25 per $100 in Nova Scotia. Customers can apply for one loan at a time. Only consumers with a valid photo ID, active phone number, proof of steady income, and valid checking account qualify for a financing.

Dollars Direct

Dollars Direct also offers cash loans of up to $500 to new clients and up to $1,500 to regular and returning customers. Borrowers enjoy quick application and approval, and funds are deposited into their bank account. Financing is offered to residents of British Columbia, Saskatchewan, Ontario, and Alberta. Two payroll methods are accepted, by check and through direct deposit. Applicants who are employed and are of legal age meet the criteria. The rate offered varies by province. The term varies from 8 days to 40 days and the due date is usually the next payday. Early prepayment options are available, and no penalties or fees apply. There are different payment options, through the customer’s bank account, by wire transfer, prepaid card, credit card, pre-authorized withdrawal, money order, and personal check.

Wonga

Operating in Ontario, Alberta, and British Columbia, Wonga is a reputable short-term loan provider that advertises instant decision making, secure application, and no hidden charges. The rate offered varies by province, for example, borrowers in Alberta pay $23 per $100. The loan term varies from 1 to 45 days, and consumers can borrow up to $400. Customers benefit from an easy-to-use online calculator that shows the total amount to pay. For example, if you borrow $300 over a 14-day period, you will pay a total of $330, including interest rates and fees, and if you borrow $400, you will pay $492 in 45 days. To apply for a loan, clients specify their marital and housing status, gender, and employment status (on benefits, retired, homemaker, temporary employment, full-time, etc.)

Criticism

Unfortunately, some lenders are dishonest and unscrupulous and use illegitimate practices so it pays to check who you are dealing with. One of the main criticisms is that payday lenders use predatory practices and target low-income individuals, families, and communities, immigrants, and the elderly. Lenders target the working poor, single parents, and people who desperately need cash. Loan sharks are also said to target vulnerable students and minorities and persons with poor financial literacy. Another problem is that loan sharks use harassment and other illegal and abusive practices such as blackmail, threats of violence, and aggressive and abusive collection practices. Predatory lenders use threats of court and law enforcement action and make abusive calls at any time of the day. Deceptive advertising is yet another problem. The outrageous interest rate offered by some providers is also a major concern. Some issuers offer loans with triple-digit and even four-digit interest rates. Some payday lenders repeatedly attempt to collect their dues and borrowers incur insufficient funds fees. While unsecured loans are easy to get if you are employed and have a bank account, borrowers often fall into a debt spiral, especially if they are already in a financial jam. Ease of access is a source of concern, and debt-ridden individuals are often tempted to use quick cash to solve their financial problems. Some payday lenders fail to disclose their annual interest rates and finance charges and use vague wording and complex financial terminology. Fortunately, in their majority, the lenders are reputable and accredited and offer clear guidelines and information on eligibility, criteria, rates, fees, and other details. One of the reasons is that many providers depend on repeat borrowers to make profits.

Most Popular Bad Credit Lenders in Ontario

December 3, 2014 By Samantha 35 Comments

Many bad credit loan providers in Ontario, Canada offer financing to individuals with tarnished credit. They offer payday loans, home equity lines of credit, and other types of financing.

Bad Credit Lenders in Toronto and the GTA

Tribecca is a private provider that offers loans to help repair and establish credit, pay medical and unexpected expenses, and consolidate bills. Prudent Financial offers home, consumer, and car loans to customers with tarnished credit. If you are trying to find bad credit loans in Toronto, Mississauga, Brampton and the rest of the GTA, Addison Credit offers financing to debtors with poor credit, newcomers to Canada, and borrowers with a history of repossessions, bankruptcies, and other negative events. If you live in Mississauga or Brampton, Dixie Auto Loans, Easy Financial, and Home Trust also provide loans for people with bad credit. To get approved, customers fill in employment and personal information such as months at employer, gross annual income, and position. Borrowers who filed for bankruptcy or are in undischarged or discharged consumer proposal often qualify.

Where to Find Bad Credit Loans in Ottawa

Customers looking to apply for a car loan in Ottawa can do so at Drive Time Ottawa, Easy Financial, and BHM Financial Group. Lenders take into account factors such as term of residency, length of employment, stable income, and income level. To apply, customers present information such as proof of vehicle ownership, proof of residency and income, and ID. References increase your chances of getting approved.

Lenders in Hamilton for Individuals with Poor Credit

Fitzgerald Motors, Prudent Value Cars, and Ezee Credit offer financing to customers. To apply, clients provide information about their income, occupation, marital status, housing cost, and address. Residents who are employed full-time usually get approved. Customers with a history of credit counseling, consumer proposals, and bankruptcies usually qualify.

Unsecured Loan Lenders in London, Windsor and South Western Ontario

Issuers such as Ezee Credit and Prime Motors of London provide loans to customers who are new divorcees, borrowers poor or no credit exposure, and bankruptcies. To apply, customers provide information such as occupation, main source of income, income before tax, SIN, and others. Companies such as DollarsDirect and Strickland’s offer loans to individuals with less than perfect credit in Windsor. Applicants with missed card payments, multiple collections, no credit, closed accounts, and missed payments are not turned down at DollarsDirect.

Who Offers Bad Credit Loans

Try Banks

Banks offer loans to customers with poor credit history but they usually qualify for secured financing such as home equity lines of credit and home equity loans. Canadian lenders offer rate quotes based on information such as the amount required, credit score, and loan purpose, for example, medical expenses, relocation and moving, car financing, home purchase, home improvement, or credit card refinancing. When applying for loans, customers provide information such as additional and individual income, date of birth, and address. Individuals with stable employment have a better chance of getting approved. Those who offer collateral are more likely to get a loan with bad credit.

Credit Unions

Credit Unions help people with bad credit and offer low-cost financing to their members. The best options are community-based and employer-affiliated unions that operate as community banks and are owned by their members. They are willing to discuss their customers’ personal and financial situation. Credit unions look at customers more personally and are more willing to work with them. They make a decision on whether to lend or not based on the borrowers’ promise to repay and their individual circumstances.

Go Online to Search for Bad Credit Lenders

Another option is to check places like the yellow pages and kijiji. Online bad credit lenders list their ads and advertise loans for bad and no credit. You will find cash advance and payday loan listings, credit and debt counseling services, and other loan providers. There is an option to sort by location and category to find providers that offer bad credit auto loans, consumer loans, and other financing options.

Use Debt Consolidation Lenders and Services

Debt consolidation is another option for individuals who are looking for financing. Lenders and services offer consolidation loans to borrowers with multiple revolving and installment debts but the rate can be higher if you have tarnished credit. There are many benefits to debt consolidation, and issuers advertise no hidden fees, no prepayment penalties, flexible payment schedules, and competitive rates. Other benefits include easier budgeting, no collection calls, and credit score improvement if payments are made on a regular basis. The loan amount varies but some providers offer up to $35,000. Issuers usually offer several consolidation options with different rates, fees, and payment terms. Some issuers offer terms of 1 to 5 years so that customers get rid of debt faster and save on interest. Lenders offer the option to consolidate loans, overdrafts, credit card accounts, and other balances. While debt consolidation companies offer loans to individuals with tarnished credit, they usually require proof of income such as pension or salary.

Try Payday Loan Lenders

Payday lenders are considered a last resort because they provide loans with short terms and extremely high rates. At the same time, this is often the only choice for people who are short of cash and face an emergency. Payday lenders offer other benefits such as quick approval, easy application, and less stringent requirements compared to brick-and-mortar banks. Just avoid controversial providers that charge broker fees. There are con artists that use fraudulent websites and request details such as credit card numbers and identification. They make unauthorized withdrawals, and customers find their account emptied. Other than that, there are reputable payday lenders that offer emergency cash. The money can be used to pay bills, utility bills, groceries, credit card balances, fees and charges, and other expenses.

Other Providers

Loan brokers and providers such as MoneyMart, Lending Tree, Prosper, Lending Club, and Citifinancial also offer bad credit personal loans in Canada. Customers with consumer proposals, history of poor credit, and loans in arrears qualify.