Pension loans in Canada: Payday, bad credit & no credit check loans

As Canadians head into their golden years, their income sources shift into government-provided benefits, such as Canada Pension Plan (CPP) and Old Age Security (OAS), and/or a private pension. If these are your primary sources of income and you’re looking for a loan, you may find your options are more limited compared to when you were actively employed. But you still have options, even if you have bad credit.

Whether you’re looking for a personal, payday loan or cash advance, there are pension loans in Canada available to seniors.

Jump to:

• Personal loans (harder to get, over $500, lower rates)
• Payday loans (easier to get, up to $1,500, higher rates)
• Cash advances (easier to get, up to $500, no credit check, no interest)

Compare personal loans for pensioners in Canada

These personal loan providers accept full-time pension as valid income. Bad credit is okay with some lenders.

Finder Score for personal loans

To make comparing even easier, we came up with the Finder Score. Interest rates, fees and features across 110+ personal loans are all weighted and scaled to produce a score out of 10. The higher the score the better the loan—simple.

Read the full methodology

Compare payday loans for pensioners

These Canadian payday loan providers serve seniors by accepting pension income as a valid source of income. Bad credit is accepted.

Compare cash advances for pensioners in Canada

These cash advance providers in Canada also accept pension income. You pay no interest on these cash loans, but you may pay a monthly subscription fee. There’s also no credit check required, so bad credit is okay.

Finder Score for cash advance apps

To make comparing even easier, we came up with the Finder Score. Interest rates, fees and features across 5+ cash advance apps are all weighted and scaled to produce a score out of 10. The higher the score the better the loan—simple.

Read the full methodology

Where can you get pension loans in Canada?

Canadians looking for loans while receiving pension income can qualify with personal loan providers, payday loan lenders and cash advance apps. While traditional banks in Canada may also accept pension income, you’ll typically need to have good credit and a debt-to-income (DTI) ratio under 40% to get approved.

Option 1: Personal loan for pensioners in Canada

Personal loans in Canada typically come with a loan terms as short as 3 months or as long as 5 years. Although the average personal loan rate in Canada is 9.32%, interest rates can range between 6.99% for excellent credit and up to 35% for bad credit.

Eligibility requirements of personal loans for pensioners

While requirements vary from lender to lender, you generally need the following:

• Steady pension income. The lender will want to see that you have regular pension income being paid to you via direct deposit.
• Low DTI ratio. This is the percentage of monthly debts you pay out of your monthly income. You typically need a DTI under 40% to get approved. Some alternative lenders can approve a higher DTI, but they’ll charge higher rates because they’ll consider you a riskier borrower.
• Good credit score. You’ll need a credit score above 660 to get competitive rates. If your credit score is below this, you can still get approved by an alternative lender specializing in fair or bad credit loans, but be prepared for higher rates.

Types of pension personal loans in Canada

While it may be a bit harder to get a personal loan via a traditional lender with just your pension and OAS income, online lenders are readily available to offer pension loans in Canada. Here’s a closer look at you can get.

• Secured loans

  If you need a larger-sized personal loan, a secured personal loan may be your best bet, especially if you’re retired and sitting on a nest egg. Secured loans involve some sort of collateral that acts as insurance for your lender in case you default on your loan. In this case, it could be your home equity or your car that you’ve already paid off. With collateral on the line, you’ll secure the lowest interest rates and you’ll have a wider range of pension loan lenders to work with.

• Unsecured loans

  Unsecured pension loans in Canada come with higher interest rates because they don’t require any form of collateral. Without an asset acting as insurance on your pension loan, your lender will rely more heavily on your credit score and monthly income to determine your eligibility for a loan.

  Having solely your pension and OAS income won’t stop you from getting these loans from online lenders. LoanConnect, Spring Financial and Loans Canada are just some of the online lenders that fund loans to Canadians with a pension. Watch out for steep interest rates that can be on par with credit cards and payday loans.

• Personal line of credit

  A personal line of credit works almost like a credit card, giving you a specified credit limit to use however you like. While personal loans give you a lump sum of funding that you need to repay within a fixed amount of time, a line of credit stays open as long as you keep up with repayments.

  The funds are there for you whenever you need them, and interest is only charged on what you withdraw.

• Cosigned loans

  A last-ditch option for borrowers relying on just their pension and OAS income is to ask a family member or close relative to cosign on your loan application and act as a guarantor. This guarantor must accept responsibility for repaying your pension loan if you default on the payments (and their credit score suffers when repayments aren’t made on time).

Compare personal loans for pensioners

Option 2: Payday loans for pensioners in Canada

Payday loans are another option if you’re looking for pension loans in Canada. They are fast and easy to get because of their lenient eligibility requirements. Many payday lenders accept pension as a valid source of income, and they can also approve pensioners with bad credit.

Can I get payday loans for pensioners with no credit check?

Yes, some lenders in Canada offer offer payday loans for pensioners with no credit check, like Cashco, Money Mart and PAY2DAY. But even if payday lenders do require credit checks, they tend to have lenient eligibility requirements and you may still be able to qualify with bad credit.

Related: No credit check loans in Canada

What you should know about payday loans for pensioners in Canada

It’s worth noting that payday loans max out at just $1,500 and must be repaid within 62 days. Payday loans are also a very expensive way to borrow and can cause financial strain.

It’s also important to ensure you have the money to make the full loan repayment when the time comes, and you’ll have enough left over to pay for other bills and expenses.

Eligibility requirements of payday loans for pensioners

You can get approved for a payday loan using your CPP, OAS or other type of pension as long as it’s recurring and paid directly into your bank account. The only way you may not get approved is if your existing debts and expenses are too high or the lender can’t verify your income or identity. If your bank statements show lenders that you may not have enough pension income to repay your loan, they may not approve you.

Compare payday loans for pensioners

Option 3: Cash advance apps for pensioners

Cash advance apps allow you to access a small loan. Depending on the lender, you repay on a strict deadline, or you can extend it if you need to. You pay no interest on these cash loans, but you may pay a monthly subscription fee.

Cash advance apps offer instant approval. If you want funding within minutes, you can pay an extra fee to access this perk.

Are cash advance apps better than payday loans for pensioners?

They might be. As an example, here’s how much a $100 cash advance could cost you vs a $100 payday loan.

	$100 cash advance	$100 payday loan
Loan amount	$100	$100
Cost of loan	0%, no extra fee	$14 for every $100 borrowed
Loan term	14 days	14 days
Payment amount	$100	$114

In this example, you save $14 by choosing the cash advance app. Keep in mind though that this is with standard funding, which takes a few business days. If you opt for instant funding, you’ll pay an extra fee. Also, if you’re a first-time borrower, cash advance lenders might approve you for amounts under $80 only.

Compare cash advance for pensioners

What incomes do lenders accept for pension loans in Canada?

Lenders want to see that you can comfortably pay back your loan and still pay for expenses in life such as food, housing and other debts.

While many lenders require you to be employed, lenders of pension loans in Canada will accept other forms of income such as:

How to apply online for a pension loan in Canada

To apply for a loan online, fill out an application form with your name, contact info and income details. Depending on the lender, you may be required to go through instant bank verification so that the lender can provide a quick decision.

With bank verification, you connect your bank account to provide the lender with view-only access to your bank statements. If you’d rather not go through bank verification, some lenders allow you to upload or email your documents.

Basic eligibility criteria

While basic eligibility criteria can vary between providers, it usually includes the following:

• Be a Canadian citizen or a permanent resident.
• Have an active bank account.
• Meet the minimum income requirements.
• Meet any minimum credit score requirements.

Required documents

Documents may include the following:

• Bank statements from the last 60 to 90 days
• Government-issued ID
• List of assets and debts if you’re applying to a financial institution

Are Canadians confident in understanding loan contracts?

Before signing a contract with any lender, it’s crucial to understand the terms and conditions, especially any interest or fees associated with your loan. According to the Finder: Consumer Sentiment Survey January 2024, 3 in 10 Canadians are either not confident at all or only slightly confident in understanding loan contracts. If something is unclear to you, don’t hesitate to ask the lender for clarification.

If a lender is not transparent with you, that’s a red flag.

Bottom line

Even if you’re no longer in the workforce, you can still apply for a pension loan in Canada. Many lenders accept OAS, CPP and private pensions as valid income, which means if you’re able to make your loan repayments and you meet the other eligibility requirements, you could be approved.

Want to learn more about loans? Head to our personal loans guide here.

Frequently asked questions

• Can I use my pension as collateral to get a loan?

  Funds in a locked-in retirement savings plan (RRSP) cannot be used as collateral, according to the Pensions Benefits Standards Act, 1985 and the Pension Benefits Standards Regulations, 1985 (BPSR). However, funds unlocked in accordance with the PBSR can be used at your discretion.

  Assets like your home equity or car are more common items used as collateral for secured loans.

• What if my pension benefits are less than the lender's minimum income requirements?

  If your pension benefits are less than the lender's minimum income requirements, you may not be eligible to apply for that specific loan. Contact the lender or find a different lender that has more lenient eligibility criteria or lower loan amounts.

• What are my options for pension loans with bad credit?

  If you have bad credit and you're counting on your pension to get a loan, you still have options on the table, but they'll be limited. For starters, you'll need to narrow your scope to lenders that provide bad credit loans and then look through their eligibility requirements to make sure they accept pension.

  Payday loans are more likely to accept pension income than other types of loans. Many payday lenders don't focus on where your income is coming from. Instead, they prefer that you show them that you have stable income streams on hand to make repayments on your loan.

• Are personal loans considered taxable income?

  Unless you borrow money to purchase an investment where you'll make income, then no, a personal loan is not tax deductible.