Do payday lenders accept benefit income?
Some do. Lenders vary on which benefits they accept and how long you need to have been receiving them. Employment Insurance, Canada Pension Plan, Old Age Security, provincial disability benefits and the Canada Child Benefit are sometimes counted. Others accept only employment income. A lender should tell you before you apply.
Why is borrowing against benefits risky?
Benefit payments are usually fixed. A $500 payday loan means $570 comes out of your next deposit, and if that deposit is your only income for the month, the gap you were trying to fill comes back immediately, plus the fee. EI in particular can stop or change with little notice. If a payment is late, you face a lender default charge and a bank NSF fee on top.
What should I try first?
- Your benefit office: if a payment is late or wrong, ask whether it can be expedited. For EI, check your status on My Service Canada Account.
- Provincial emergency help: income and disability assistance programs in most provinces can issue crisis or special-needs payments for urgent costs.
- Payment arrangements: utilities, phone companies and landlords will often spread a bill if you call first.
- Credit unions: some offer small loans to members on benefit income at much lower cost.
- 211: dial 2-1-1 for local food, housing and bill help.
If I do borrow, what should I check?
Make sure the due date falls after your next benefit deposit, borrow the smallest amount you can, and confirm the lender is licensed in your province. Remember Ontario and BC limit each loan to half your net income during the loan period, which includes benefit income.