Canada's population is rising - and so too is the unemployment rate. As more people seek alternate forms of income, they may look to payday loans as a potential solution to help cover essential costs.
Payday loans are short-term cash advances that can provide borrowers with instant funding. Although the term 'payday' suggests that you must be employed to be approved, many payday lenders provide payday loans accepting unemployment benefits to those not currently working.
If you’re receiving unemployment benefits in Canada, you can be approved for a payday loan. While the requirements may be different between lenders, most payday loan providers will accept employment insurance (EI) as an approved source of income.
Of course, smart financial planning during unemployment is the most sustainable financial solution. You could be approved for a short term loan to help cover your expenses before your next benefit payment.
Understanding Unemployment Benefits
Unemployment benefits, also known as Employment Insurance (EI), are payments designed to temporarily replace lost wages while you are looking for a new job.
To be eligible for employment insurance in Canada, you must have lost your job (through no fault of your own) and be actively seeking new employment. The amount you receive is based on your earnings before unemployment and the number of hours you worked in that period.
Employment insurance can help you manage personal finances while looking for a job, but it’s not always possible to meet all your expenses. EI benefits provide only a portion of your previous earnings, meaning they may not always be enough to cover essential costs. This is where payday loans can supplement your benefits, providing additional financial support.
H2 - Payday Loans: An Overview
As a new borrower, you should understand the basics of how payday loans work. As mentioned, it's a type of short term loan that can be used to cover immediate expenses such as emergency medical bills, rent, groceries, or other essential living costs.
Payday loan companies and online lenders typically offer fast cash loans like this. The criteria for eligibility are more lenient than traditional bank loans, making it the ideal choice for people with lower credit scores or non-traditional income.
Additional advantages of payday loans include:
Fast & Easy
Most loan applications can be completed in minutes. Finding an online loan provider can be even quicker, with many offering instant cash advances.
Instant Approval, 24/7
Online lenders can provide instant approval thanks to their automated systems that operate 24/7. You can apply, get approved, and receive the funds within minutes, any time of day, anywhere.
Low Credit Score Requirements
Although payday lenders require a credit check to approve the loan, poor credit isn't a deterrent. Most applicants with low credit (or no credit) are approved for a small loan of up to $1,500.
Flexible Repayment Terms
Most small loans come with more flexible repayment terms than traditional bank loans, meaning you'll have more freedom over your payment plan.
Although these loans can provide immediate financial assistance for unemployed Canadians, you'll want to clearly understand the payday loan terms before applying. They typically come with higher interest rates that may not be suitable for everyone. Carefully compare your options and find a provider that offers the most competitive rate.
Payday Loans for Unemployment
Being in between jobs isn’t easy and many non-traditional lenders are willing to help by providing payday loans for unemployment. If you're receiving unemployment benefits, but still need access to quick cash, you can apply for and get funded like any other applicant.
While bank loans usually require a traditional form of income to be approved for funding, alternative loan companies accept government benefits and other non-traditional forms of income. Unemployment benefits are perfectly acceptable for these lenders, making it easier to secure a loan.
If you're considering applying for a payday loan with unemployment benefits, here are some key points to keep in mind:
Ensure the lender you choose is fully licensed and has a proven track record of positive online reviews.
Understand what the interest rates and associated fees are. Look for companies that offer competitive rates and zero hidden fees.
Know the repayment terms before applying and consider choosing a lender that offers flexible options that work for your budget.
If you're still unsure what loan provider would be best for you, look for one that provides loan term comparisons on its website. Having all the details clearly laid out can help you make a more informed decision.
Managing Payday Loans Responsibly
Payday loans can be a great financial aid option when used responsibly. Before you take out a loan on employment insurance, read the following tips so that you can manage it more effectively:
1. Create a budget
One of the most important ways to manage your payday loan responsibly is by creating a budget to give you a clear picture of your expenses, what you owe, and how much you have to cover the costs.
2. Compare different loan providers
Comparing different loan providers will help you get the best rate for your payday loan. While many reputable online lenders are available to choose from in Canada, it's important to do your research and find one that works for your unique financial situation. Here, you can find a list of payday lenders that accept unemployment benefits to compare.
3. Make payments on time
Whether your payday loan terms require one payment or multiple payments, stay on top of your repayment schedule. Missing a payment can lead to late fees and loan defaults. An easy way to pay on time is to set up automatic payments. If needed, you can set reminders for the payment due dates.
4. Pay off debt as soon as possible
Of course, paying off the loan as soon as possible is always advised. Doing this can help you avoid accruing more interest or fees that come with late payments. Paying off debts on time and in full can also keep your credit score from dropping.
5. Contact your lender if there's a problem
If you've recently experienced an unforeseen financial emergency and cannot make your payment, contact the payday lender and explain the situation. Some lenders may be able to work with you and offer alternative solutions, such as an extension on the loan term.
6. Get professional financial advice
You can also seek professional financial advice from a reputable lender or financial advisor. They can help you create a plan and provide resources to get out of debt faster.
Payday Loans for Unemployed Canadians
Payday loans provide easy financial solutions to Canadians receiving unemployment benefits. Whether you need to cover essential expenses, pay for medical emergencies or handle an unexpected circumstance, you can rest assured that you have options in the form of fast cash loans.
Of course, responsible financial behaviour, including budgeting, paying debt on time, and seeking professional advice is the key to good financial standing, whatever your employment status may be. The guidance above can help you make the most of your borrowing options while still keeping your finances in order.
References
1. "Bank of Canada expected to raise rates next week, despite the rise in unemployment rate." CTV News - https://www.ctvnews.ca/canada/bank-of-canada-expected-to-raise-rates-next-week-despite-rise-in-unemployment-rate-1.6470725
2. "Employment Insurance benefits and leave." Government of Canada - https://www.canada.ca/en/services/benefits/ei.html
3. "Loans for the unemployed in Canada." Finder - https://www.finder.com/ca/unemployed-loans
4. "Get out of Debt." Credit Canada - https://www.creditcanada.com/
