There are several types of payday loans in Canada. There are some that are easy to get, while others may have hidden fees and difficult-to-understand terms.
Choosing the right one for you depends on how much money you need, and how quickly you need it. Keep these things in mind while shopping for payday loans online.
- Repayment terms
Payday loans, also known as Cash Advance Loans or Payday Loans, are unsecured loans with high-interest rates that must be paid back with the borrower’s next paycheque. If the loan is not paid in full by that time, late fees will be added to the loan.
A rollover option extends the payback period, but it comes with additional fees. Many provinces do not allow rollovers.
In Canada, the repayment terms of payday loans are similar to those of traditional short-term loans. The repayment period is usually between 2 weeks to 62 days.
However, there are some exceptions to the rule. While payday loans were historically issued for biweekly pay cycles, lenders are now offering more flexible loan repayment terms.
- Down payment
In Canada, half of all employed individuals live from paycheque to paycheque. Their paychecks are stretched thin by the cost of daily living, and unexpected bills can make budgets even more stretched. For these people, a payday loan can help them get through these tough times. These loans require little more than your regular bank account information and a short form.
Payday loans are short-term loans that you must repay on your next paycheque. However, they have high-interest rates and fees and can cause you to get into debt again.
The interest rates and fees of these loans can be as high as 650% in some provinces. If you do not have the funds to repay the loan on time, you can request a rollover which will extend the payback period. However, this will incur additional fees, and you may not be able to do this in your province.
Payday loans online are a great way to access emergency cash when you need it most. However, not all payday loans are created equal. Different lenders will have different application processes, which can affect the time it takes to get a loan approved.
If you want a payday loan in Canada that is easy to apply for and approve, consider these tips.
A payday loan’s short-term nature is one of its most problematic aspects. It is often only available for a few days, putting the greatest pressure on borrowers. The average term is just ten days, meaning the borrower must pay the principal plus interest within that time.
This puts an undue burden on the consumer and shifts the burden of illiquidity from one pay period to the next. This puts cash-flow-challenged consumers at risk of a terminal dependence on these loans.
There is a need to tighten regulations on payday loans in Canada. The high-interest rates that payday loans charge often cause financial instability, especially for low-income Canadians.
The government has committed to cracking down on these predatory lenders. However, the Canadian Consumer Finance Association, which represents financial institutions providing installment and payday loans, has warned that the changes could hurt low-income Canadians.
Moreover, the higher rates could lead more people to seek loans from illegal lenders.
The Act defines a payday loan as a financial product that provides an advance of money in return for a post-dated cheque, pre-authorized debit, or similar future payment.
It does not include any type of overdraft protection, margin loan, or pawnbroking. The regulations also limit the total cost of borrowing under an agreement.