Can You Get A Payday Loan As A Self-Employed Person In Canada?

“Self-employed” has a special ring to it. For some, it’s like a step up the social ladder. That being said, we’d like to congratulate you on being a self-employed person in Canada.

According to Statistics Canada, self-employed persons accounted for 15% of the labor force in Canada as of 2018. The number was set to rise as the years go by. However, being self-employed comes with its challenges, and securing payday loans is one of them.

Can you get a payday loan as a self-employed person in Canada?

Do self-employed people need loans?

Although it can be disputed, we’d argue that self-employed people need loans more than the majority of people on payrolls. Sure, running your own business has its perks like being your boss and deciding what happens and when. However, it’s also the self-employed people that end up with a lot of expenses (up to $4000 a year more than the average employed person). In addition to that, there are a lot of market uncertainties that can easily wreck their flow of income.

Can I Get A Payday Loan If I’m Self-Employed?

Yes, you can. However, you’ll have more difficulties securing one. You’ll have to work a little harder than the average person to be able to find a payday lender that willing to listen to you.

Why is it so difficult to secure payday loans for the self-employed in Canada?

You have to know the basics of payday loans to have a better understanding of this. If you understand how payday loans work, then you’ll be able to use the requirements to your advantage. It’s all about being smart and doing things that will increase your chances of securing a payday loan.

What are payday loans?

As the name suggests, payday loans have a lot to do with your income. Payday loans are short-term loans that allow you to borrow up to $1500. Payday loans are supposed to be repaid using your next paycheck- This is why employed people with regular “guaranteed” income are preferred by payday lenders.

Payday loans are very popular because lenders disregard bad credit scores when issuing out loans.

It’s also important to note that payday loans have an element of risk because of the short repayment period. Failure to honor the agreement will attract more fees and interest charges.

Self-employed people, freelancers, and contractors usually find it difficult to secure payday loans because most lenders perceive their income as “unpredictable”. It’s sometimes hard for self-employed people (especially small business owners) to prove that their income is consistent and dependable. However, this doesn’t mean that all hope is lost. There are ways you can go around this barrier.

You might have tried to secure a payday loan from all lenders in your area with no success. We’re glad to inform you that you still stand a chance at securing one from lenders all over the country (Surely there is one that will accept your application). But remember, you need to be careful when applying for loans online. Some lenders aren’t licensed. Allow Loans Geeks to do the searching for you.

How The Application Process Works With Payday Loans For Self-Employed Canadians

The first step is finding a payday lender that is willing to listen to you- This is crucial because you don’t want to waste time applying for loans from lenders whose criteria you don’t match.

One way you can do this is by going through their list of requirements. It’s always good to know what the lender is looking for in a debtor. Some straight-up say that they’ll not give a chance to self-employed Canadians (a lot of traditional lenders do this). Stay away from those. It’s easy for them to decline your application with the help of a computer program that will quickly discard applications from people who aren’t on the payroll.

We’d advise you to look for private lenders that offer payday loans. You have a higher chance at securing a loan from private lenders because the majority of them work one-on-one with their clients- This gives you the chance to convince the lender that you’re financially able and steady enough to repay the loan.

Once you’ve found a lender that understands your financial situation and is willing to give you the loan, ask them on the following points:

  • All the fees, charges, and costs that come with the loan.
  • The date when the loan is due.

If you’re okay with their fees, charges, and repayment period, you’ll then proceed to do one of the following:

  • Depending on the lender’s terms, you’ll have to fill out a form that allows the lender to automatically withdraw funds from your bank account when the loan is due (be careful with this one- think it through).
  • Some lenders will require you to give them a post-dated cheque for the amount loaned out.

Note: Carefully read through the lender’s terms before you sign the loan agreement. Also, ask and make sure they give you a copy of the loan agreement. Don’t sign it if they refuse to give you a copy.

What Documents Do You Need When Applying For A Payday Loan While Self Employed

Below are some of the documents required by a payday lender:

  • Identity verification documents such driver’s license, passport, and copy of your ID
  • Documents containing your personal bank details such as bank statements for the last 90 days prior to application
  • Proof of income such as your business’ bank statements and invoices from the previous months
  • Copy of your bills for them to be able to compare your income with your expenses

Other Financing Options for Self-Employed Canadians

Payday loans sure sound nice (no credit score check). However, there are plenty of loans out there for self-employed Canadians that you can get without having to hustle from one lender’s office to another.

Loans Geeks offers self-employed Canadians the chance to apply for and secure a loan from the comfort of their homes or offices. They have cut down the lengthy application process and enabled people to have their loans approved within 3 business days. At times, you can even have your loan approved in around 3 hours tops.

Business Loans

Self-employed Canadians often find themselves in need of loans to help fund their businesses. You might want the money to expand your business, buy new furniture, or upgrade your equipment. The majority of business-people in Canada find themselves stuck with business loan lenders who offer loans with loads of restrictions. You can trust Loans Geeks for the best business loan deals that are flexible.

Credit Card Consolidation Loans

Credit Card Consolidation loans are low-interest loans that allow you to repay your high-interest credit card loans. They also simplify the repayment process. Instead of repaying each credit card loan individually (which can be hard to manage), a credit card consolidation loan will repay all your existing credit card loans at once. You’ll now be left with only one debt to clear with regular monthly installments.

Debt Consolidation Loans

Debt consolidation loans work on the same principle as credit card consolidation loans but on a general scale. They allow you to clear all your high-interest loans so that you’re left with only one low-interest loan. They also offer a good way of managing debt.

Home Equity Loans

Home equity loans allow you to cash out your home equity. The majority of homeowners have no idea that they’re sitting on money that could be invested and used to improve their lives. It could be a second mortgage or a home equity line of credit, there are plenty of ways to cash out your home equity.

Mortgage Loans

Buying a house is considered an investment on its own- An investment guaranteed to pay off in the future. That being said, you need to make sure you find a mortgage loan that suits your current financial capability (fair interest rates and adequate repayment period). Remember, finding the right lender is the first step to having a piece of mind.

Car Loans

Cars are a must-have necessity for most Canadians. Car loans will get you a car in exchange for fixed monthly installments.

Personal Loans

Personal loans can be of great importance especially when you’re stuck in tough financial situations. The good thing about personal loans is their flexibility which means you can use them for just about any purpose you can think of. It’s also important to note that Loans Geeks can also get you a loan from lenders who don’t pay much attention to credit scores.

Frequently Asked Questions

Can I get a payday loan if I’m self-employed?

Yes. However, it can difficult to find a lender who willing to give you the chance to prove your financial stability. This is why we’d advise you to look for private lenders since they deal with their clients one-on-one- It’ll give the chance to defend yourself.

Can I get a loan without income proof?

Yes. The best way to do this going for a secured loan. A secured loan is a loan that has security/collateral attached to it. If done well, it can be just as good as having a stable consistent income.

How do I prove my self-employed income?

You can do so by submitting your business bank statements, profit and loss statements, tax returns, and online transaction records- This will give the payday loan lender an idea of your income and expenditure.

Why am I not getting approved for payday loans?

Here are some of the reasons why lenders are declining your payday loan applications:

  • They don’t give out loans to self-employed people (Been keen on the lender’s requirements. Some quickly disregard self-employed people).
  • You weren’t able to provide them with enough proof of your self-employed income

Bad credit score- Some payday lenders will not accept very low credit scores unless you secure the loan (attach security to it).

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