As the saying goes, “When it rains, it pours.” Sometimes life hits us with unexpected expenses, such as an emergency home or auto repair. Often, these sudden expenses aren’t cheap.
For the 47% of Canadians living cheque to cheque, there’s often little to no money leftover to cover emergencies.
If you have good employment history and good credit, then getting a personal loan is easy. However, if you have bad credit, getting approved for a loan is a bit more difficult.
Thankfully, there are some lenders that offer no-credit-check loans in Canada. I’ll show you some of the best ones below.
No-Credit-Check Loans: What To Expect
To many, a no-credit-check loan may sound too good to be true. This is partly true. While no-credit-check loans can be a lifesaver for those with bad or no credit, these loans also come with some major drawbacks, such as:
- High-interest rates
- High monthly payments
- Costly late payment penalties
- The need for a cosigner
- The need to back the loan with your assets
Before you apply for a no-credit-check loan, understand that no-credit-check loans have very high-interest rates. In some cases, you could end up paying back more than double the original amount that you were loaned, which can put you in a real bind.
No-credit-check loans are often referred to as predatory loans since they’re often marketed toward those who aren’t in the best financial situation to begin with.
Without a solid plan to pay your high-interest loan off quickly, you could easily find yourself financially trapped with your personal assets on the line.
One thing to note is that I don’t recommend a no-credit-check loan for large amounts of money. They’re better suited to small amounts (under $1,000) that can be quickly paid off in a month or two before interest starts stacking up.
Many people automatically assume that they have no credit or a bad credit score without actually knowing. Before you apply for a high-interest no-credit-check loan, I recommend checking your credit score for free using one of these platforms.
With any luck, your score will be higher than you expect, and you can apply for a traditional personal loan with a lower interest rate.
The Best no-credit-check Loans In Canada (2022)
If you’ve tapped all of your other options and still can’t get the money you need, then a no-credit-check loan may be your last chance. Here are some of the top lenders I recommend looking into for no-credit-check loans in Canada.
- How To Apply: Apply Online Today
LoanConnect is a platform that functions as a sort of marketplace for personal loans. LoanConnect pairs applicants with pre-approved offers from lenders offering everything from debt consolidation loans to vacation loans and auto refinancing.
The platform can also connect applicants with lenders who offer no-credit-check loans or bad credit loans.
The application process is relatively simple. First, you’ll need to create a free account.
Then, you’ll be asked to fill out a brief questionnaire detailing the type of loan you’re looking for, how much you wish to receive, and how quickly you want to pay the debt off.
LoanConnect will then perform a “soft” pull on your credit. This will allow lenders to see your basic credit information to determine your eligibility and won’t affect your credit score.
After submitting your information, you’ll start receiving personalized quotes and pre-approved offers from no-credit-check lenders and bad-credit lenders.
During your official application process, the lender will usually hit your credit with a hard credit check to determine the amount that they can lend you.
2. Loans Canada
- How To Apply: Apply Online Today
Loans Canada is very similar to LoanConnect. The main difference is that Loans Canada doesn’t offer as many types of loans as its competitor.
Currently, Loans Canada can pair applicants with debt relief loans, auto loans, business loans, and no-credit-check personal loans.
Like LoanConnect, this company serves as a “middleman” service, which means that it’s not a lender itself. Instead, the company will ask you to complete a brief personal survey to determine your eligibility for various loans.
With no credit or bad credit, you won’t get the best rates on loans, but the platform will still be able to connect you with no-credit-check lenders.
Loans Canada is a BBB-accredited business and is one of the top fastest-growing companies in Canada. So, it’s safe to say that it’s a trustworthy platform.
Recently, Loans Canada released its free credit score app that’s available to all members. This is a great way to view your score and keep up with recent changes to your score over the course of your loan repayment.
3. Lending Mate
- How To Apply: Apply Online Today
The previous two no-credit-check loans that I mentioned are loan marketplace platforms (brokers) that give customers the ability to compare rates from multiple lenders.
Lending Mate, on the other hand, is a lender. When you apply for a no-credit-check loan through Lending Mate, you’ll borrow directly from the lender.
Lending Mate offers up to $10,000 for personal loans, even to those with bad credit. The average interest rate is 43% per annum, which is quite high, though. If you were to borrow $10,000 and opt-in for a 36-month payment plan, then you’d end up paying $17,951.56.
All of the no-credit-check loans offered by Lending Mate are guarantor loans, which must be cosigned by a third party willing to repay the loan if you should fail to do so.
Before applying, you’ll want to have a cosigner with good credit who’s already agreed to help you out with the loan application.
4. Spring Financial
- How To Apply: Apply Online Today
Spring Financial doesn’t offer no-credit-check loans to first-time applicants. However, they do offer bad credit loans ranging from $500 to $15,000, depending on your income. That being said, you’ll need to have a steady job before applying.
Spring Financial offers a great credit-building program called “The Foundation.” This is a twelve-month program that helps you build your credit by charging you a monthly subscription fee and applying the amount to a virtual “loan” (that you don’t actually have access to), and reporting it to the credit bureaus.
Once you’ve been enrolled in The Foundation program for a year and you’ve made all of your monthly payments on time, then you’ll automatically be eligible for Spring Financial’s Evergreen Loan.
This no-credit-check loan offers up to $1,500 to all applicants, regardless of their score, since you’ve proved your trustworthiness as a borrower.
Once you pay off the initial $1,500 Evergreen loan, Springfield Financial will give you the option to borrow more money the next time.
Customer Service and Application Process
Here are general steps in the application process, though details can vary by lender:
- Inquiry: Begin by inquiring about the loan options available. This can usually be done online or over the phone. Some lenders have physical locations where you can inquire in person.
- Application: You’ll need to fill out an application form. This will likely ask for personal information (like your name, address, and social insurance number), employment details, and financial information.
- Proof of Income: You’ll likely need to provide proof of income, such as pay stubs or bank statements. The lender uses this to verify that you have a steady income.
- Loan Agreement: If you’re approved, the lender will provide a loan agreement. This should detail the terms of the loan, including the interest rate, fees, and repayment schedule. Make sure you understand this agreement before signing.
- Funds Transfer: Once the agreement is signed, the lender will transfer the loan amount to you. This can often be done through direct deposit into your bank account.
- Repayment: You’ll need to repay the loan as per the agreed terms. This often involves regular payments (weekly, bi-weekly, or monthly), which may be automatically withdrawn from your bank account.
As for customer service, most no-credit-check loan providers offer support through multiple channels like phone, email, or live chat.
Pros & Cons Of no-credit-check Loans
No-credit-check loans are a great tool to have in your back pocket for emergencies. However, these loans can also be risky and have some undesirable downsides. Here’s a quick overview of the pros and cons of no credit check loans, so you can see if it’s right for you.
- You can get approved for a loan with no credit or bad credit.
- You can receive up to $15,000 from some lenders.
- You’ll usually receive your money within 24 hours.
- No-credit-check loans are subject to very high-interest rates.
- If you only make the minimum monthly payment, you could end up paying back double your loan amount.
- No-credit-check loans often have harsh penalties for late or missed payments.
- No-credit-check loans often require a guarantor or must be secured with an asset.
Types Of no-credit-check Loans
You usually can’t get an unsecured loan when you’re applying for a no-credit-check loan. With no credit or bad credit, you represent a very high risk to the lender. This means that you’ll need to back your loan with something tangible, such as your personal property or a cosigner’s money.
Here’s are the primary types of no-credit-check loans:
|Type of No Credit Check Loan||What It Means|
|Secured Loan||A secured loan is secured using personal property, such as a vehicle, your home, or equipment.|
|Guarantor Loan||A guarantor loan is guaranteed by a guarantor (cosigner) who agrees to take responsibility for your loan if you’re unable to.|
|Payday Loan||A payday loan is guaranteed by your paycheque, which you’re guaranteed to receive on a specific date. You’ll either pay a portion of the loan with each paycheque, or agree to pay the entire amount.|
To wrap things up, here are some helpful tips to pay off your high-interest loan.
No-credit-check loans typically have ridiculously high-interest rates. You’ll mostly pay towards the interest upfront, with very little going toward your actual principal balance.
If you’re only making your minimum payment, then you’re going to end up paying a lot more back than you borrowed.
By doubling your monthly loan payment, you’ll be contributing a larger amount toward the principal balance. This will not only reduce your interest but also help you pay off the loan faster.
If you ever feel like you’re in over your head on payments, it may be better to borrow the money from an individual instead. A friend or a family member likely won’t charge you interest.
If you’ve made your previous monthly payments on time, they’ll be more likely to trust you to make timely payments to them.
To facilitate paying off your debt faster, I recommend picking up a side hustle, even if it’s just temporary.
Driving for Uber, freelancing online, or delivering food orders for SkipTheDishes can help you earn extra money in your free time that you can put towards your loan.
No-credit-check loans are useful if you need some quick cash to pay a bill or cover emergency expenses.
Just remember that they come with very high-interest rates, high monthly payments, and harsh penalties. Only use these high-interest loans as a last resort or cover amounts you’re certain you can pay off quickly.
Just because you have bad credit doesn’t mean that you can start building good credit.
A great place to start is with a secured credit card that will report your payments and card balance to major credit bureaus. As long as you use it wisely, you’ll see your score improve gradually over time.
Keep on reading to see my list of the best secured credit cards in Canada!