Are Same Day Loans Better than Payday Loans?

A same day loan. Sounds fascinating, right? Imagine a bank crediting a loan to you on the same day you apply for it. It’s impossible due to how the banking process works in Canada. In fact, it’s impossible no matter where you are in the world.

It might not be coming from the bank but you can still secure a same day loan in times of emergency. On this page, we’re going to learn everything there is about same day loans in Canada.

What is a Same Day Loan?

If we break the terms down, they refer to a loan that you can get on the same day you apply for it. In finance, “same day” means a 24-hour window. So, if you apply for a loan and get it in your account within 24 hours, that’s the same day loan.

A great example of such a loan is a payday loan. Payday lenders very aggressively market the possibility of you getting the money you need within a very short time. However, payday loans are not the only kind that qualifies as same day loans.

Types of Same Day Loans

As we already hinted in the previous section, a same day loan can have many faces. Let’s list some of the most common ones you can expect to see in Canada. And then, we can go into the details of each.

1. Payday Loans
2. Title Loans
3. Pawbroker Loans
4. Installment Loans

Payday Loans

This is the obvious first listing. A payday loan is a very short-tenure loan that you can seek in Canada. Most provinces allow up to 62 days to pay it back, in return for up to 500% APR! The name “payday” came from the notion that you’re supposed to pay it back when you get your next paycheck.

The maximum you can get from a payday loan in Canada is capped at $1,500. You need to pay between $15 to $21 per $100 borrowed for the tenure in interest. It’s mostly the high interest that makes payday loans a less appealing form of same day loans.

Title Loans

This is also a quick loan that you can within 24 hours. However, the catch is that you must keep your car’s title as collateral. It’s a simple transaction. You provide the lender with your car title in return for the loan. And you get the title back when you pay the loan back.

How much you can get from a title loan will depend on the make and model of your car. This is a better option than a payday loan thanks to lower interest rates. However, it’s still a very expensive loan to carry for long periods.

Pawnbroker Loans

If your area has a pawnshop, chances are it credits loans on very short notice. Similar to title loans, you’ll need to put something as collateral when you get the money. The good thing is that pawn shops pretty much accept anything as long as it’s equally or more valued than the loan amount.

Apart from the collateral, you also have to pay high interest. This is the riskiest option for the same day loan in our opinion because pawnbroker loans are usually not regulated by the government. Another reason is that even if you pay a partial amount back, you risk losing the valuable item.

Installment Loans

On a broader aspect, these loans are considered relatively safe. You still have to deal with high interest rates. You’re basically paying for the speed of the loan processing. It’s safer because you can pay the loan back in installments.

It may not sound like a good idea because you end up paying a lot in interest alone over time. But the fact that you don’t have to constantly worry about the outstanding loan is a big relief.

Moreover, if you compare the APR of an installment loan with a payday loan, it’s way lower. The rate remains fixed for the tenure of the loan.

Online vs Retail Same Day Loans

There was a time when you could only ask for a loan from brick-and-mortar establishments. Nowadays, online applications are becoming increasingly popular. Which is the better option, you ask?

If you go for a retail loan provider that markets same day loans, chances are you can walk out with a check or cash. As long as all of your documents are in order, of course.

For online same day lenders, you’ll need to submit all the documents over the internet. And the money will most likely be credited to your bank account or your Interac account.

In both cases, you should receive the money within 24 hours, if not earlier. The biggest drawback of online same day lenders is that they have to depend on the bank to clear payments. The company may process your request within a few hours but the bank can take up to a day to clear it.

The easiest way to avoid this problem is to watch out for the timeline. If you’re applying for a loan on the weekend, it’s only normal that it’s going to take longer. Also, if you request the loan in the later part of the day, it may carry over to the next day for cleaning. It’s the little things that can keep you out of trouble when dealing with any kind of loan in Canada.

Is it Possible to Get a No Credit Check Same Day Loan?

“No credit check” means the lender of the loan won’t check your credit score before granting you the loan. And yes, these loans also exist in Canada. But if you go for them, you’ll have to agree to a much higher APR than regular same day loans. In some cases, it may even go higher than payday loans!

If you ask, we’d recommend staying away from such lenders. Your credit score is the only window 3rd parties have to understand your financial situation. If someone is offering a loan without checking that, it’s certainly not normal.

Final Words

As long as you’re ready to deal with high interest rates in Canada, you can get the loan before 24 hours are completed. To make the process seamless for you, we’ve covered the whole journey in our guide. Read it thoroughly before you apply for a same day loan.