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Emergency loans in Canada 

Unexpected events can happen to anyone, usually requiring significant financing. In addition to your savings and insurance coverage, emergency loans in Canada can help support you in those times. One source of financing can come from the equity you’ve built in your home. 

What is an emergency loan? 

Emergency loans can be the solution when you need a substantial amount of money within a short time frame. They are like regular loans, in which you obtain a lump sum for the unplanned expense. Afterwards, you repay the loan with interest, usually in monthly installments.  

They are not a type of loan but are known for having more flexible criteria and quicker processing times. They come in different types, and knowing them can help determine what kind of emergency loan you need. 

A couple discussing their loan application

How emergency loans work 

Using an emergency loan is straightforward, and the process can be broken down into a few simple steps.  

In the application step, you’ll find a lender offering a loan that accommodates your financial situation and needs. You’ll get to discuss the interest rate and loan term with the lender, and you can ask them any questions.  

Emergency loan lenders understand the need for urgent financial support, so you may not need to provide your financial history or credit score. Depending on the lender, getting a loan for a financial emergency may require collateral.   

After getting approved and acquiring the loan, you can apply it to your urgent needs. Usually, emergency loans are paid monthly, starting the month after you receive the money.  

Reasons for an emergency loan 

The money from an urgent loan can fill different kinds of financial needs. The following are some of the common reasons people may need an emergency loan. 

Parts to keep your car running steadily may need replacement once in a while. Some components may cost over a thousand dollars. 

Sometimes damage from natural disasters must be patched up, or something within the house breaks suddenly and needs a replacement.

While you have insurance, you may require additional financial support. Emergency loans are one way to cover unseen costs.

You may have to leave the country on an unplanned trip or need financial support during a season of unemployment. Along with your own savings, emergency loans can help you feel you have financial stability during those times. 

While emergency loans can help in any of the above situations, they should help alongside your own emergency fund. Even though they have the flexibility, the purpose of the loan should stay within the bounds of what it was designed for.

Benefits of emergency loans in Canada 

Emergency loans can apply to your situation when you need prompt financial assistance while offering a few advantages.

Because the approval is not as high as traditional loans, emergency loans are more available to people of different financial backgrounds.

An emergency loan can be applicable to any situation. Whether you need it for repairs or medical bills, you do not need to demonstrate your reason for getting an urgent loan.

In certain cases, your credit score will not be used to determine your approval. For example, home equity loans from alternative lenders only require owning your home.

Eligibility criteria for personal loans  

  • Age and citizenship— the minimum age to receive a loan is 18 years, and you must at least be a permanent resident in Canada.  
  • Credit score—not every lender will require a credit check. Typically, banks examine people’s financial history to determine loan eligibility and creditworthiness. The higher your credit score, the more likely you’ll be approved at the bank.   
  • Income and employment— traditional lenders will likely verify your income to ensure that you’re able to repay the loan. They usually prefer applicants with salaried jobs. 

Traditional financial institutions will conduct background checks and, in doing so, may take some time before they give you the results of your application. Instead of banks, people in BC may refer to alternative lenders for a quicker application process and fewer financial examinations. Alternative lenders like Alpine Credits only consider the equity in your home.   

Types of emergency loans 

You get an emergency loan from different sources, each lender with different approval criteria. 

Credit cards

Using your credit card is the most immediate option and can be used for smaller, sudden expenses.  However, credit cards have limits, so it’s important to be mindful of how much you can charge on your card. Even if the expense falls under your credit card limit, the best practice is to keep your outstanding balance under 30% of your limit 

Credit cards also have relatively high interest rates, usually up to 20%. Be sure to consider how much you’ll pay towards interest when using your credit card for emergency expenses.

Credit card cash advance

Cash advances are similar to withdrawing money from your bank account, but instead, you’d be withdrawing cash from a portion of your credit limit. While it appears the same as using your credit card to pay for something, cash advances are services from your bank.  

Because you’re using your credit card, you don’t need to apply for extra credit. However, the interest may be higher than your credit card’s, and you may also have to pay additional fees. Before getting a cash advance, contact your credit card provider or your bank to determine the details.

Personal loans

You can find emergency personal loans from traditional and alternative lenders if you need a considerable amount of financing. You can spend the money as soon as you receive it and repay the lender in installments.  

The amount you’re approved for depends on your credit score or the value of your collateral. There are also two types of personal loans, each accommodating different financial situations.  

  • Unsecured emergency personal loan—in this case, a lender provides you with a lump sum, and you repay within a set amount of time with interest. Getting an unsecured loan involves a credit check and a minimum credit score of 600. However, they tend to come with a higher interest rate. 
  • Secured emergency personal loan—the key difference between secured and unsecured loans is the presence of collateral. With secured loans, you provide an asset as collateral, which assures the lender that you will repay the loan in full. The approval criteria are more flexible than those for unsecured loans, and the interest rates are comparatively lower.  

Make your home more comfortable

Afterwards, you can apply with the lender of your choice. Usually, their application forms are online so that you don’t have to travel and apply in person.   

Using home equity loans 

A home equity loan is one of the best alternatives to unsecured personal loans and credit card loans. If you are a homeowner and have been paying the mortgage for a significant amount of time, you’ll have built a substantial amount of equity. That value can be accessed as a loan. 

As a type of secured loan, your credit score, income, and employment status have less influence on the outcome of your application. Only the amount of equity you have matters, determining your eligibility and how much you can borrow.

Emergency money from your home equity 

Home equity loans can be a reliable source of emergency funds because they have quicker approval processes and have potentially high amounts 

Eligibility requirements 

Getting a home equity loan is different from getting a regular loan from the bank. Credit history, employment, and debt-to-income ratio are all factors that traditional lenders want to verify before lending. For a home equity loan from Alpine Credits, you only need to provide the following. 

  • Proof of homeownership—the home deed is one of the most common documents you can provide that demonstrates your ownership.  
  • Proof of insurance—you can request a certificate of insurance from your provider. The documents can be saved readily and sent to the lender.  
  • Valid identification—you can bring any government-issued identification. Just be sure that the name matches the one on the property deed and home insurance.  
  • Home appraisal—getting an appraisal is usually done by another service. An appraiser can visit your home and determine the overall value of your property.  
  • Sufficient equity—you can estimate how much equity you have by subtracting your outstanding mortgage balance from the appraised value of your home. If you own at least 25%, you are eligible for a loan of up to 75% of your equity from Alpine Credits.  

Application steps for a home equity loan 

Loan applications typically follow the same process, so personal loan applications follow the same procedure.  

Apply online

The online loan application at Alpine Credits is simple. Filling it out only takes a few minutes.

Get approved

You’ll hear back about your application within 24 hours. You’re eligible for approval if you own at least 25% of your home.

Receive deposit

Once you’re approved, you will receive the direct deposit within a few days. You can use the funds for all your unexpected expenses. 

Unexpected events can happen to anyone, requiring additional financing. For homeowners, there’s an easy financial solution hidden in their property. Not only is the process quicker, but you may be able to tap into a loan significantly bigger than other loan types.  

Alpine Credits has been helping Canadians gain access to their home equity as a financial solution for over 50 years. Your equity is an important financial tool, and not many homeowners have accessed its potential. Regardless of employment status, Alpine Credits understands the need for financial support. 

You can contact a Financial Solutions Specialist if you have more questions. Not only can they provide insight on how home equity loans can help you, but they can assist you in the application process as well.

Frequently asked questions

Alternative lenders are the better choice for a loan because they can provide funding more readily than traditional financial institutions. If you are a homeowner, consider applying for a loan from Alpine Credits. The criteria are not as strict, and you could receive the funds within a week of applying.  

Home equity loans, credit card cash advances, and personal loans are all options that Canadians have when they need money more promptly.

Payday loans are known for being one of the fastest ways to get funding, but interest rates are high and can sometimes become worth more than the loan itself. A home equity loan is a better alternative for homeowners who need money urgently.

Urgent loans are another term to refer to emergency loans. They are sources of funding that you may need on short notice, and usually, they are found with alternative or private lenders.

Those with credit scores that don’t meet lending criteria still have an opportunity to receive a loan in more urgent situations. Homeowners can access a loan from Alpine Credits based on the value of their equity. Regardless of your credit score, you’re approved as long as you have sufficient home equity.