Best No Credit Check Loans in Canada
What you Should Know
- Some lenders don’t check your credit score, instead they may require collateral or a guarantor.
- Interest rates range from 35% to 45% with mid-term payback periods.
- You’ll receive funding in as little as 24 to 48 hours.
- Ensure to read lender reviews.
Although many lenders require a credit report in Canada, a select few provide loans without checking your credit report. In general, these lenders place extra emphasis on your income and existing debt service levels. No credit check lenders believe your income and existing debt levels are the most critical factors determining your ability to repay a loan. However, this results in higher interest rates than lenders that require a good credit score.
No credit check loans are an easy way to get the money you need without going through a credit check. Your loan amount, approval odds, and interest rate will depend on your ability to make payments as agreed. Typically, interest rates range from around 35.00% to 45.00%, with payback periods of a few months. As a result, they are short to mid-term loans with moderately high interest rates. Many lenders also provide rapid funding, and borrowers can expect to receive a deposit in 24 to 48 hours.
However, borrowers need to be extra cautious to avoid predatory lenders. This category of loans has significant overlap with payday lenders. Borrowers should avoid payday lenders unless necessary since they commonly have APRs exceeding 300%. The list of lenders below has been carefully curated to avoid predatory lenders. Clicking on an individual lender will jump to the section where you can learn more about their no credit check loan. However, always make sure to do your research and carefully examine lender reviews.
| Most Popular Unsecured Lenders | |||
|---|---|---|---|
| Lender | Interest Rate (APR)* | Funding Amount | Term Length |
| | 32.00% | $300 - $1,000 | Up to 3 Months |
| | 34.16%* | Up to $60,000 | Up to 4 Years |
| | Up to 38.00% | $300 - $1,000 | 90-112 Days |
| | 43.00% | $2,000 - $10,000 | 12 - 60 Months |
Advantages and Disadvantages
| Advantages | Disadvantages |
|---|---|
|
|
Advantages
- Accessibility: You can receive funding and improve your credit score without history.
- Rapid Funding: Some lenders may instantly approve you and provide funding in 24 to 48 hours.
- Wholistic Review: Lenders review many factors to determine your overall financial health instead of assessing your application based on your credit score. This includes your debt service ratios and assets. Lenders may also calculate your net worth when assessing you.
Disadvantages
- Higher Interest Rates: No credit check loans usually carry a higher interest rate than more conventional forms of financing, such as a line of credit.
- Lower Loan Amounts: Lenders may be more conservative with no credit check loans and will provide you with smaller amounts.
- Income Emphasis: Lenders will be cautious in assessing your income. They'll want to see a long history of employment and predictable paycheques.
The Two Types of No Credit Check Loans
There are two broad categories of no credit check loans. Lowering the lender's risk will mean you'll receive a lower interest rate. This is typically done by providing collateral for your loan. The collateral allows the lender to sell the asset if you can't make debt payments. For example, when you get a mortgage, you are collateralizing your home. Failure to make payments results in foreclosure. As a result, you'll receive lower interest rates.
You can lower your interest rate with no credit check loans by securing various assets, such as your car. This section will discuss the two main types of no credit check loans.
- Higher interest rates
- Lower funding amounts
- Shorter payback periods
- Personal Loan: Many online lenders provide personal loans without a credit check.
- Payday Loan: These high-interest-rate loans should be avoided unless necessary. They are typically small amounts with short repayment terms.
- Lower interest rates
- Higher funding amounts
- Longer payback periods
- Car Title Loan: You use your car as collateral and can keep driving it while making payments. You can generally borrow up to 50% of your car's value.
- Pawn Shop Loan: You can use your valuable items as collateral. You'll receive a loan amount based on the estimated worth.
Where to Get a No Credit Check Loan
LoanConnect is an online loan marketplace that matches all kinds of borrowers with the best loan. While they offer a broad range of lending products, they have clarified to have one no credit score lender in their database.
Qualified applicants will receive the term loans shown here.
- Be 18 or over
- Government-issued ID
- 60% maximum TDS ratio
Canadian Title Store is a car title lender. This means you’ll need to collateralize your car to receive the loan. Failing to make payments can result in the lender seizing your car utilizing an installed ignition inhibitor.
Interest rates will vary with your car mileage, make, and year. The rate provided is resulting from applying with a hypothetical 2016 Honda Civic EX (120,000KM) registered in Toronto. While they lend up to $60,000, your maximum funding amount will likely be up to 50% or your car’s market value as displayed by the Canadian Black Book.
- Be 18 or over
- Auto insurance
- Valid drivers license
- Spare set of car keys
- Resident of Canada
- Fully paid vehicle registered under your name
DMO credit is a micro-lender offering no credit check loans. Since their loan amounts are smaller they are comfortable lending much faster. Although they consider themselves a “payday lender”, their interest rates are significantly lower than comparable companies offering 300%+.
You can apply online by clicking the button below.
- Be 18 or over
- Government-issued ID
- Have a stable income for at least 2 months (Pay stub required)
- Have regular pay deposited into a Canadian bank account (Bank statement required)
LendingMate is an online guarantor lender providing loans without a credit check. However, you will need to apply with a guarantor who has solid financial health. Your guarantor’s credit score and income will be analysed.
Failing to make payments will result in your guarantor needing to step in. However, you can receive larger loan amounts and extended term lengths through this process.
- Government-issued ID
- Borrower aged 19-75 who’s a Canadian resident
- No active bankruptcy or consumer proposal for borrower
- Suitable guarantor aged 19-75 who’s a Canadian resident
- Guarantor must have a good credit history and ability to make payments
Requirements for No Credit Check Loans
Loans without a credit check tend to be risky for lenders. This is because there is yet to be a proven history of debt payments. Additionally, most are unsecured loans meaning there is no collateral the lender can seize. As a result, lenders emphasize your income and ability to make debt payments.
Generally, they'll review your income and debt service ratios to determine how much you can borrow. Having a cosigner may also increase your chances of receiving funding. To qualify for no-credit-check loans, you should meet the following criteria.
Income and Expenses
Most lenders want to see you have a stable income with the budget to make payments. They generally require a minimum of two months of employment at your current job. This will be verified through bank statements and a potential background check.
Some lenders also have a minimum monthly income requirement. While this varies, the minimum is generally $1,000 to $2,000. It's lender-dependent if social security programs such as parental benefits, unemployment, or social assistance contribute to your lending qualified income.
As your income increases, so does the amount you can borrow. This is due to debt service ratios, which calculate the percentage of your income directed towards debt payments. For example, LoanConnect has a cap of no more than 60% of gross income towards debt payments.
(Potential) Guarantor
A guarantor will increase your chances of receiving a loan. Additionally, they can increase the amount you can borrow and lower the interest rate. This is because a guarantor reduces lender risk by assuming full responsibility for your loan if you fail to make payments. Being a guarantor requires trust that the borrower will make monthly loan payments.
Lenders will likely conduct a complete analysis on your cosigner, including a credit check. They must also be a resident of Canada above the age of 18.
(Potential) Asset Assessment
Securing an asset will also help you qualify for a loan and get a better interest rate. If you pursue a secured loan, lenders may perform an asset assessment. This involves analyzing the collateral asset. Essentially, lenders want to determine if they can get their money back if they need to liquidate the collateral.
Loan to Value (LTV) is an essential factor lenders consider when approving secured loans. It is a calculation that estimates the relationship between the loan amount and the value of the collateral asset. Lenders often have a maximum LTV ratio for secured loans. For example, if a borrower wants to use their car as collateral, the lender might agree to a maximum of 50% LTV. This means they can loan up to 50% of the car's value.
No Credit Check Loan Alternatives
No credit check loans are a great way to get the money you need, but it's essential to understand that they come with higher interest rates than other forms of financing. Before signing up for no credit check loans, consider some of these alternatives:
Bad Credit Loans
If you have no credit or poor credit, you can turn to bad credit loans. The interest rates are still higher than prime lenders, but they offer competitive rates compared to no-credit-check loans. Many bad credit lenders also report your payments to the credit bureaus. Successfully making regular payments can increase your credit score over time.
Student Credit Card
Students can qualify for a student credit card. These are specifically designed for people with no credit history and low income. Many student credit cards also come with no annual fee.
However, your maximum limit will typically range from $500 to $1,000. Additionally, there will be few features as you'd get with a travel credit card. If you have a bad credit score, you can qualify for a credit card for bad credit.
Family & Friends
Borrowing from family and friends can be a great no credit check loan alternative. You'll avoid high interest rates and can often receive no-interest loans. However, this type of loan doesn't report to a credit bureau. Your credit score will stay the same as you successfully make payments.
RRSP Withdrawal
If you're facing a financial emergency, withdrawing funds from your Registered Retirement Savings Plan (RRSP) can be an option. However, this also comes with a high cost of borrowing. Initially, your financial institution must withhold 5% to 30% of the withdrawal. While you’ll also need to pay income taxes on the withdrawal, the withholding will apply to it. Borrowers in lower income brackets will have to pay minimal taxes on the withdrawal. This significantly reduces their cost of borrowing.
Some lenders such as National Bank provide secured RRSP loans to avoid these fees. This will avoid the costs and taxes unless you fail to make payments and the collateral needs to be liquidated.
The Bottom Line
No credit check loans can be a great way to get the money you need if no other options are available. However, it's essential to understand that they come with higher interest rates and fees than many other forms of financing.
Lenders will emphasize your income and expenses to ensure you can repay the loan. If you can't qualify, there are many alternatives available. However, always research lender reviews to avoid high interest rates and fees.