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On average the income levels of those living in Fredericton New Brunswick are lower than the national average. This can put a financial strain on those dealing with emergencies or unexpected large expenses. Unfortunately, when this type of situation occures payday loans are all too often the first choice for consumers.
Interested in more information about payday loans in Fredericton? Keep reading.
Do you know what your rights are when dealing with a payday lender? Find out here.
What Is a Payday Loan?
A payday loan in Fredericton is a convenient and quick way to borrow small amounts of money. These loans are generally used for an individual to get enough money to make it to their next payday, usually a couple of hundred dollars, but it can vary. They can also be used in emergencies as they are quick and easy to get approved for. Typically, all you need to apply and get approved is…
- A valid chequing account
- Government-issued ID
- Proof of income or employment
- Proof of address
- Be the age of majority in Fredericton
Payday loans come with a term of two weeks and need to be repaid on the borrowers next payday, hence the name. Payday loans also come with extremely high-interest rates, oftentimes in the triple digits.
The Payday Loan Cycle Of Debt And How To Break It
So while the interest rates are high, the thing to really watch out for when utilizing payday loans in Fredericton is the payday loan cycle of debt. The payday loan cycle of debt is when an individual gets stuck in a cycle of borrowing via payday loans and become unable to meet the short repayment deadlines. The cycle of debt looks a little like this:
- An emergency or a lack of cash leads you to get a payday loan because no other option is quick enough for you
- Once your next payday arrives, you have to pay back the loan (plus interest)
- Your financial situation hasn’t quite gotten better yet, so you don’t have enough to pay it back
- As a result, you take out another payday loan to cover the first
- This continues for potentially months and months, and can easily ruin a person’s finances
So if you find yourself currently stuck in this vicious and seemingly endless circle of debt, what are you supposed to do? (learn how to find relief from payday loan debt)First and foremost, you need to make a budget and cut costs as best you can. If you are able to budget successfully and reduce costs where possible, you could organically get yourself out of this cycle and eventually be able to pay off the loan without taking out another one.
Consider any way to make more money. This can be a difficult step to take, but any amount will help. Take on a weekend job or sell items you no longer use. You may also want to consider seeking the help of an installment loan provider in Fredericton to consolidate your payday loan debt, you’ll likely qualify for a lower interest rate and you’re payment will be spread out, making it easier to handle.
Take a look at this infographic to learn more about the payday loan cycle of debt.The Warning Signs Of Predatory Lenders
Most payday lenders in Fredericton are honest and legitimate, but unfortunately, that isn’t always the case. Because most people who get a payday loan have nowhere else to turn, it’s common for loan scammers and predatory lenders to operate in the space.
As a result, if you need to use payday loans or are looking into them for someone, be sure to watch out for the signs. Some signs of predatory lenders are:
- Hidden fees or terms
- They try to get you to sign something without reading it
- They don’t have much of a presence in real life or online
- They try to get you to lie
- They try to pressure you into acting quickly
If you notice a number of these signs present in the lender you are dealing with, be careful. Of course, some predatory lenders are very good at their craft and won’t show any signs that they are anything but legitimate. As a result, it is hard to perfectly evade or avoid all predatory lenders. Generally, if you feel uneasy about a lender or something seems too good to be true, it is often a good idea to continue your search and look for a lender that doesn’t give you that feeling.
For more information about loan scams in Canada, click here.
Alternatives To Payday Loans In Fredericton
But of course, it is often recommended to look elsewhere for the money you need if at all possible. Thankfully, there are a number of alternatives to payday loans in Fredericton that are worth consideration and could help you get the money you need without having to pay triple-digit interest rates.
One option is to potentially use a home equity line of credit or a vehicle title loan. These reduce the risk for lenders, so they are often easier for more people to get lower interest rates, as well. However, if you default on them, you could potentially lose your home or car, so be careful. Always make sure you can make payments on time and in full when dealing with home equity lines of credit or title loans.
Also, be sure to consider online lenders, as they might be able to get you small personal loans with fair interest rates much quicker than traditional lenders. Most traditional lenders don’t work fast enough to get you your money right when you need it, but reaching out to an online lender to see if they could help is a good move.
Lastly, you could consider asking a friend or family member. While we understand that this is not an option for most consumers in Fredericton, it is still something that should be considered before a payday loan.
Interested in what the true cost of borrowing is? Check out this infographic. Right and Wrong Situations to Use Payday Loans
While payday loans in Fredericton are often expensive and should be avoided in most situations, that doesn’t mean there aren’t some times where using them makes sense. For example, payday loans can make sense in a situation where you find yourself in a serious emergency and need cash quickly, but know you will have enough to pay off the loan once the term is up. Keep in mind though that it is impossible to predict the future. Even if you are 100% certain you’ll have the money to pay off the loan within two weeks, things happen.
Of course, this means that most other situations are the wrong time to use payday loans. You especially want to avoid them when your monthly bills already take up most of your income, when you want to borrow for something you don’t really need, and when your income is fairly unstable. Getting a payday loan in any of these situations could easily lead to you finding yourself eventually stuck in the payday loan cycle of debt.
Finding The Right Lender in Fredericton
Finding the right lender and the best loan type for your unique needs can be difficult, this is where Loans Canada can help. Regardless of what type of loan you’re looking for in Fredericton, we are confident that we will be able to help answer any questions you may have and help improve your situation.
