Alternatives to more expensive loans and other high-cost financial services

You might decide to get a more expensive loan (payday loan, instalment loan, title loan) because you are worried about qualifying for a less expensive loan. However, even with limited or poor credit history, or a low income, other options might be available for borrowing money.

Consider the following lower cost alternatives:

  • A loan from family or friends
  • Ask a family member or friend to co-sign for a loan, to help you get a lower interest rate and better repayment terms.
  • A pay advance from your employer
  • Cashing in work vacation days
  • A loan, line of credit, or credit card from your bank or credit union. Some offer loans that you might qualify for, with much lower interest rates than a payday loan and access to ATMs
  • If you already have a credit card and need short-term cash, you might be able to get a cash advance on your credit card. Although this will probably cost more than a regular credit card purchase, it is often a cheaper alternative to a payday loan or other expensive options
  • Determine which expenses are essential and urgent, and which aren’t. Try to find ways to delay your expenses until you get paid
  • Ask your bank or credit union if you qualify for overdraft protection on your chequing account. Using overdraft protection might come at a cost, so make sure you understand what that is and can afford it
  • Think about having a bank or credit union account set aside as an “emergency fund”. Try to put a small amount of money into the fund regularly – whatever you can manage - to cover unexpected costs
  • If you are thinking of using a rent-to-own service and you don’t have cash available to buy the item outright, consider buying it through a regular retailer with a less expensive option instead, such as a credit card or a bank or credit union loan
  • If someone is transferring money to you, most banks and credit unions offer online e-transfers within Canada for a very small fee (or no fee). This can be a much cheaper option than most wire transfers, letting you keep more of the money. Consumer Protection BC offers more information on e-transfers
  • If you are thinking of using a more expensive loan to pay off your existing debt, contact your lenders as soon as possible. They might be willing to work with you to come up with affordable payment plans. This might come at a cost, so ask what that cost is and make sure you can afford it
  • For advice on managing your debt, speak with a credit counselling service, a financial advisor, or a licensed insolvency trustee or insolvency lawyer. More information is found on the Resources page. You can use credit counselling services even if you don’t currently have financial problems, for help to avoid problems in the future