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Living in Ontario has plenty of perks, but one drawback is the cost. Many cities and towns, including Kitchener and Waterloo, have high costs of living and expensive real estate. In fact, the Kitchener-Waterloo area has seen massive increases in home prices over the last few months.
Some people can afford these bumps in house prices and the overall cost of living, but others cannot. For those who can’t keep up, they need to borrow money to stay afloat and avoid defaulting on loans or missing payments. Many will borrow in a traditional manner, such as a standard personal loan, but others will rely on payday loans in Kitchener to get by.
So what exactly is a payday loan in Kitchener? Well, a payday loan is a short term loan that is often meant to help someone out until their next payday. These are usually anywhere from a few hundred dollars up to $1,500. Payday loans typically have a term of two weeks and must be repaid on the borrower’s next payday, thus the name. The big negative of these types of loans is that they often come with incredibly high-interest rates.
Because of the short term and the risk involved, lenders often charge interest rates that can sometimes reach into the triple digits. They should mainly be used for emergencies and covering small amounts, not used for rent or other large and recurring payments.
If you miss paying it back on time, you run the risk of getting hit with more fees and penalties, so borrow carefully.
Do you know your rights when it comes to payday loans? Learn more here.
However, before you go out and secure a payday loan in Kitchener for your short term financial needs, it is important that you know about the payday loan cycle of debt. The payday loan cycle of debt is when you need to take out a new loan to pay off a previous one. The payday loan cycle of debt often looks like this:
This cycle can sometimes continue for months or years, and can absolutely decimate your finances.
Now that you know a bit about how payday loans in Kitchener work, when is it a good time to get one and when is it not? This is something people struggle with a lot, as knowing the right kind of borrowing you need for your unique situation is often unclear.
In general, payday loans rarely make sense. Their high fees, strict terms, and sky-high interest rates make them quite undesirable for most people. Really the only time you should utilize payday loans is when you have a serious financial emergency and know you will be able to pay off the loan on time and in full.
As you could imagine, this means there are a lot of times where using payday loans doesn’t make sense. Anytime your monthly bills take up most of your income, you need to steer clear of payday loans. They are also bad for when you just need extra money and if you have an income that isn’t stable, getting these payday loans can be even riskier.
If you find yourself struggling with payday loans in Kitchener, you aren’t alone. Some can get out of the cycle on their own, but others might need help. Thankfully, there are debt relief solutions that can help you out. These include:
Each of these options are viable for most people and are certainly better than continuing to be stuck in the cycle of debt. The type of debt relief solution you go with depends on how much debt you have. Some are better for those with a lot of debt, while others will work better for people with only a limited amount of debt.
Learn even more about how to find relief from payday loan debt, click here.
While we haven’t offered a lot of praise to payday loans in Kitchener, they can definitely help someone out in a pinch. However, many payday loans are actually predatory in nature or might be an outright scam. These predatory loans look to take advantage of those with nowhere else to turn.
Loan scams take millions of dollars from people every year, and they have gotten pretty creative to make their predatory or scam loans look legitimate. Many predatory loans can blend in with legitimate ones and can fool even the savviest of borrowers. However, there are a few warning signs to watch out for when searching for loans that can protect you. These include:
While not every predatory loan will be easy to spot, looking for these aforementioned warning signs can be a big help. If you believe that a loan or agreement is too good to be true and you feel uneasy about it, it is a good idea to listen to your gut and keep looking elsewhere.
While payday loans in Kitchener might need to be used at one time or another, there are several alternatives that might be a better option for your needs.
One of the first alternatives is to get a standard installment loan. If you have the time to secure one, it can save you a ton of money in interest, come with much better terms, and can be repaid in easy to manage installments over a longer period of time.
Another alternative is to borrow from friends or family members. This will save you a ton of interest and save you from dealing with a bank or lender at all. Many of us are too prideful to ask our friends or family for money, but it is often worth a try if you are really struggling.
Also, if you own your home or vehicle, you might have some additional ways to borrow money when you are in need. You can get either a vehicle title loan or a home equity loan. These use your vehicle title or home as collateral and can get you quick and easy access to money, with relatively low-interest rates. Of course, it is quite risky to put your home or vehicle up as collateral, so be sure to only borrow in amounts that you know you can pay back in full and on time.
Any of these options or alternatives listed above are often better choices than a payday loan. They will be much cheaper, come with less risk most of the time and keep you far away from the payday loan cycle of debt. Financial experts or professionals in your area can also help you out with other alternatives or deciding which is the best for you.
Looking for good alternatives to payday loans in your area? Loans Canada can help match you with the right lender based on your unique needs.
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