Online payday loans are short-term financial solutions that provide individuals with quick cash to cover unexpected expenses or fill gaps in their budget until their next payday. They often come with simple application processes and can be applied for entirely online, making them a convenient option for those experiencing financial challenges. These loans typically have a short repayment timeframe and may require the borrower to pay back the full amount within a few weeks.
Before taking out online payday loans, you’ll need to meet a few specific requirements, which help the lender to know that you’re a good candidate for the loan. Some of the requirements are mandated by law in the local region, while others are dependent on each payday lender.
Discover what the requirements are for online payday loans.
Canadian citizen
To take out a payday loan in Canada, almost all companies will require that you are a Canadian citizen or a permanent resident. There is one way around this, though. If you are not a Canadian citizen, you could look at some online lenders that work outside of Canada.
The laws do not apply to these companies. However, the fact that the laws don’t apply to them leaves borrowers without protection.
Proof of identity
You will also need to provide a form of valid, government-issued identification that proves who you are to the lender.
Age of majority
In any given province, you must be the age of majority or older to borrow a payday loan. It is illegal for the lender to supply the loan to someone who does not meet this age requirement. This is a rule put in place by the government to help ensure responsible lending and borrowing in Canada.
Proof of address
When borrowing a payday loan, you will need to prove that you have a permanent address. This is assurance for the lender that they will locate you if there are any issues regarding the loan repayment.
It also shows that you already have responsibilities with regular payments, like rent or a mortgage which can help assure them that you are a good candidate for a loan.
Proof of income
Payday lenders must do their due diligence in checking that you are reasonably able to pay back the loan. To do this, they typically will ask for proof of regular income. They may ask for up to three months of proof.
This assures them that you have passed any probationary period you may have been undergoing and have steady cash flow.
Chequing account
A chequing account is mandatory because most lenders provide the loan via direct deposit instead of cash. As a borrower, this is safer for both them and you as a borrower, as large sums of cash aren’t passing hands.
In this way, the lender can deposit your loan automatically and withdraw the payment automatically on the agreed-upon due date.
No bankruptcy or consumer proposals
Payday lenders are required to lend responsibly. This means that if you currently are in the middle of bankruptcy or the midst of a consumer proposal, you will not be able to take out a payday loan. This is because a bankruptcy or consumer proposal indicates potential financial issues at the moment and would not be indicative of responsible lending.
Borrow $1,500 or less
In Canada, a payday lender cannot lend out more than $1,500 to anyone patron, and that patron may not take out more than one loan from the same lender at one time. Because payday loan interest rates can be quite high, this is another way that lenders and the government are working together to try to ensure responsible lending for Canadians.
Province to province
Some requirements change from province to province. The best way to find out the requirement in your province is to access the provincial government website to read the documents they have provided on the topic.