During the early days of the mortgage business, brokers would require a lot of paperwork…
Best Unemployment Loans in Canada [2021]
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Whether you’ve lost your work due to layoffs or COVID-19, left for personal reasons, or are simply looking for a new professional path, being unemployed can put you in a difficult financial situation. When this happens, you may wonder if you may acquire a loan while unemployed.
Yes, you certainly can. In fact, a number of lenders in Canada currently provide unemployment loans to jobless credit users who are in debt. That’s correct, if your application is granted, you’ll get a lump sum of money placed into your bank account. This money can be spent for nearly any purpose.
What Does It Take To Get An Unemployment Loan?
One of the best things about unemployment loans is that you don’t need a job to qualify for funding. It’s leverage because it is a requirement for several other credit products. However, you must meet a few personal and financial requirements to be qualified. These include:
Income – You must be able to cover your loan installments with your current income. Welfare, unemployment insurance, the Canadian Child Benefit, your pension, or other government payments are all acceptable kinds of basic income.
Creditworthiness โ A few blemishes on your credit report aren’t usually a deal-breaker. However, bad credit, a history of missed payments, or a recent bankruptcy, can limit your alternatives, raise your interest rate, or prevent you from getting a loan.
Required Documents may contain (but are not limited to) the following:
- Photo identification from the government (passport, driver’s license, etc.)
- The most recent bank statements (proof of income & active bank account)
- Your Social Security Number (SIN)
- A utility bill or other form of address verification
- A VOID cheque or a pre-authorized debit form
Unemploymentย Loans:ย Whatย Theyย Areย andย Howย Theyย Work
Whileย receivingย governmentย benefits,ย youย mayย beย eligibleย forย aย varietyย ofย loans.
This includesย employmentย insurance,ย CCBย benefits,ย socialย assistance,ย andย disabilityย supportย income.
1. Payday Loansย forย Unemployedย People
Inย manyย placesย ofย Canada,ย paydayย loansย forย theย unemployedย onย benefitsย areย available.ย Inย fact,ย youย mightย getย aย paydayย loanย whileย receivingย unemploymentย benefitsย inย Ontario,ย Alberta,ย Britishย Columbia,ย orย anyย otherย jurisdiction.
However, according to Quebec’s lending restrictions, securing a payday loan while on unemployment benefits can be problematic. Payday lenders in Quebec are only allowed to charge a 35 percent annual percentage rate. This is why many payday lenders do not operate in the province.
Payday loans, however, are one of the easiest loans to obtain when unemployed. That’s because many people accept non-traditional forms of income such as EI, CCB, social assistance, CPP, and disability benefits. Furthermore, it rarely necessitates credit checks.
Payday loans are therefore a suitable choice for people who need money quickly yet have bad credit.ย However, it’s crucial to note that payday loans come with a number of concerns, including high-interest rates, short repayment terms, and the possibility of becoming trapped in a payday loan cycle.
2. Installment Loansย forย Unemployedย People
Inย Canada,ย thereย areย lendersย whoย provideย installment loansย toย personsย whoย areย unemployedย dueย toย aย disability,ย anย injury,ย pregnancy,ย orย simplyย becauseย theirย employerย hadย toย fireย them.ย
Dueย toย theย additionalย risk, theyย faceย byย lendingย toย someoneย whoย isย regarded as hazardous,ย theseย installment loansย willย typicallyย haveย higherย ratesย and shorter-termย lengthsย andย quantities.ย
Installmentย loansย areย oftenย preferableย toย paydayย loansย sinceย theyย haveย longerย durationsย andย lowerย interestย rates,ย makingย themย moreย affordable.
3. Auto Titleย Loansย forย Unemployedย People
Anotherย typeย ofย creditย thatย doesย notย requireย employmentย verificationย isย vehicleย titleย loans.ย Youย shouldย beย ableย toย applyย forย anย autoย titleย loanย asย longย asย youย haveย aย sourceย ofย income.ย Becauseย ofย theย securityย providedย byย anย autoย titleย loan,ย theย conditionsย areย muchย moreย flexible.ย Ifย youย don’tย makeย aย payment,ย theย lenderย canย seizeย yourย carย asย collateral.
4. Unemployment Creditย Lines
Aย lineย ofย creditย isย anotherย typeย ofย loanย thatย canย beย obtainedย withoutย theย needย forย employmentย verification.ย
Linesย ofย creditย areย idealย forย unexpectedย expenses. They provide youย withย aย cashย reserveย thatย youย mayย useย anytimeย youย needย it.ย
Youย justย payย interestย onย theย amountย youย spend,ย andย youย recoverย accessย toย theย fundsย asย youย repayย theย amountย youย used,ย justย likeย withย aย creditย card.
How Do You Pick The Best Unemployment Loan Provider?
Remember that there are numerous lenders in Canada who can provide you with an unemployment loan. However, you may need to look outside of banks and credit unions, where the conditions are often more stringent, requiring you to have a job in order to qualify.
Instead, you may need to apply with a private lender, a no-credit-check lender, or a payday lender. As long as you can make your loan payments, these organizations are usually much more liberal with their limits. They may also have more flexible repayment plans and faster approval processes.
Make sure you do your homework and keep an eye out for scams.
All of this is to say that doing your homework and comparing a few different lenders in your area before handing over any personal or financial information is critical. After all, one of the most significant hazards associated with unemployment loans is the possibility of higher interest rates and administrative expenses.
Unfortunately, because alternative lenders are more difficult for the government to supervise, there is a higher risk of scams, fraud, and illegal rates. These predators are either attempting to offer you a bad loan at an exorbitant price or, even worse, attempting to steal your identity, money, and financial information.
Payday Loans For Unemployed People On Benefits In Canada Should Be Avoided
A payday loan, for example, is a small payment ($100 โ $1,500) put directly into your bank account. These loans are appealing since they have few restrictions and can be approved in as little as one or two days. Furthermore, some payday lenders will approve you even if you don’t have a job, as long as you have a regular source of income.
Payday loans, however, are problematic due to their high-interest rates (300 percent โ 500 percent APR) and short repayment terms of 14 days. While they may be a realistic alternative in an emergency, they come with a slew of fees and penalties. A payday loan might be significantly more expensive than a typical jobless loan as a result of all of this.
Before you apply, double-check that your lender has valid credentials, a long history of satisfied customers, and a solid BBB rating.
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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