Payday Loans for ODSP

You may be able to get a payday loan while receiving ODSP, but approval is not guaranteed.

Some lenders accept government benefits as a source of income. Others require employment income.

You should also check how the loan could affect your ODSP before borrowing. ODSP rules state that loans may be treated as income unless they are approved and used for an exempt purpose.

KOHO Cash Advance (Alternative)

KOHO Cover is not a traditional payday loan. It is a cash advance designed for Canadians who need a smaller amount of money to cover short term expenses.

With KOHO Cash Advance, you can:

• Get up to $250 as an instant cash advance (amount depends on eligibility)

• Pay no interest on the advance

• Avoid a credit check

• Repay automatically once you add money or get paid

You subscribe to the Cover bundle for a low monthly fee, and in return you get the advance feature plus extras like a credit report, financial coaching, and priority support.

Can You Get a Payday Loan on ODSP?

It depends on the lender.

Ontario notes that most payday lenders usually ask for proof of continuous employment. They may also ask for proof of address and a chequing account. This can make traditional payday loans harder to qualify for if ODSP is your only source of income.

Some lenders may accept ODSP or other government benefits as income. Each lender sets its own eligibility requirements.

Can a Payday Loan Affect Your ODSP?

It can.

ODSP requires recipients to report loans and other money they receive. A loan may be exempt if it is approved and used for certain purposes. Otherwise, it may be treated as non-earned income and deducted from your income support.

Approved purposes can include certain:

• Disability-related expenses

• Health-related expenses

• Education or training costs

• Business expenses

• First and last month's rent

• Normal household items

• Exempt assets such as a primary vehicle

The rules depend on what the money is used for. Contact your ODSP caseworker before taking out a loan if you are unsure how it will be treated.

How Much Can You Borrow With a Payday Loan in Ontario?

Ontario payday lenders cannot lend more than 50% of your net income per loan. The amount you qualify for may therefore depend on the income the lender accepts when reviewing your application.

The lender may also have its own minimum income requirements.

How Much Do Payday Loans Cost in Ontario?

Payday loans are one of the more expensive ways to borrow money.

In Ontario, lenders can charge up to $14 for every $100 borrowed.

For example:

• Borrow $100 → up to $14 in borrowing costs

• Borrow $300 → up to $42

• Borrow $500 → up to $70

These costs apply over a very short borrowing period. That can make repeated payday loans expensive.

What Happens If You Can't Repay the Loan?

Payday loans are designed to be repaid quickly. Missing the payment can make an already tight budget harder to manage.

Ontario limits the fees payday lenders can charge. The maximum fee for a dishonoured payment is $20. Lenders can also charge limited interest when a payday loan goes into default.

If you take three payday loans within 63 days, the lender must offer an extended payment plan.

What Should You Consider Before Getting a Payday Loan on ODSP?

Start with the total cost of borrowing. Make sure the repayment will still leave enough money for rent, food and other essential expenses.

You should also find out whether the loan could affect your ODSP payment. This is especially important because not every loan is automatically exempt under ODSP rules.