Take out a Fairstone loan between November 17th to 30th, 2021, and you won’t have to make a loan payment until next year.
If you’re an Alberta resident, you might be walking down the street one day and spot a payday loan lender. You may then start to wonder if it’s the right source of financing to cover the cost of something important to you.
The lender will probably advertise these kinds of perks:
- No credit check required
- No employment verification
- Only proof of bank account and address is needed
- Fast cash, same day approval
Be careful! Don’t be drawn in by these sales tactics and always think hard before you consider applying for a payday loan.
Is it Cheaper to Miss a Payment or Take Out a Payday Loan?
Depending on what you need the money for, a payday loan might sound like a convenient, quick alternative to missing a rent payment or any other payment for that matter. Then again, since payday loans can be extremely expensive in the long run, it might be better to either negotiate with your landlord or lender in Alberta or just take a penalty charge and learn from your negative experience.
To learn about other types of predatory loans and debt relief options for them, read this.
What Will My Payday Loan Cost Me?
Generally speaking, payday loan amounts range from $100 – $1,500. While these are relatively small sums compared to other kinds of loans, the real expensive nature of payday loans doesn’t start to show until interest rates and other such fees are involved.
How do lenders set their interest rates? Find out here.
Thankfully, interest rates in Alberta are the lowest of any province where payday loan businesses are legal, at 3.724% (down from 21% since 2016). That’s $15 for every $100 borrowed. This might seem appealing. However, you should still be extremely careful when applying for a payday loan in Alberta. Make sure to ask your lender exactly how much yours will end up costing you.
Can I Get a Payday Loan Online?
As alternative lending becomes more popular, you will surely come across many sources of online payday loans. One difference with online services is that you’ll sometimes receive your loan in a day or two, versus physical payday loan locations, who will lend you money immediately following approval.
Be particularly cautious, however, when looking into online payday loans. As convenient as online approval may appear, there are plenty of scam artists out there trying to steal your banking and personal information. If they do not have a physical, licensed operation that you can visit (and report to the proper authorities, if necessary), it’s probably better to stay clear of them.
Check out this infographic to learn more about the payday loan cycle of debt.
Are There Alternatives to Payday Loans in Alberta?
Yes. There are still plenty of other methods available in Alberta to help you finance the things you need, such as:
- Emergency installment loans
- Regular credit cards (they can still lead to a cycle of debt when used irresponsibly, but at least the interest rates and fees will be much lower)
- Secured credit cards (catered to consumers with bad credit, weighed against a security deposit)
- Vehicle title loans (if you own a vehicle outright)
- Borrowing money from friends or family members
- Home equity loans or lines of credit (if you have home equity built up)
Are There Laws that Payday Loan Lenders Must Follow in Alberta?
There aren’t many places left in Canada that allow payday loan lenders to operate legally. However, for those that do, there are specific laws set in place to control the way they do business. For example:
- No lender is allowed to force a “roll over” of your loan, meaning they cannot provide you with another loan to finance your first if you haven’t paid it in full
- No lender in any province, Alberta included, may charge more than 23% interest ($23 for every $100 borrowed)
- All lenders in Alberta and Canada, in general, must have a business license validated by their provincial government
- No lender is allowed to contact you more than 3 times weekly
- No lender is allowed to contact your friends, family, or colleagues for any reason
- No lender can sell you any type of loan, other than a payday loan
- All lenders in Alberta and Canada, in general, must provide you with the exact details concerning your loan, payment process, interest fees, penalty charges, and any other related costs
- All lenders must give you the right to cancel your payday loan contract within 2 business days of approval
Ever wonder what the real cost of a loan is? Take a look at this infographic to learn more.
Can Loans Canada Help Break My Payday Loan Cycle?
If you are already stuck in a payday loan debt cycle, it can be very hard to get out. While it is true that legitimate payday loan lenders are not permitted to roll your loans over, there are still many predatory lenders in Alberta and Canada, in general, that will try. The cycle, however, doesn’t just apply to predatory lenders, especially if you’re constantly relying on payday loans to live.
What the Predatory Payday Debt Cycle Often Looks Like:
- You start by applying for a small loan
- High-interest rates and additional fees get tacked on for the service provided
- With your other general expenses, you’re suddenly not able to cover the cost of the loan with your next paycheck
- The 14 day grace period passes and your lender charges you a penalty
- You’re then forced to pay off your debt using another loan
- That debt grows larger over time, keeping you trapped
At Loans Canada, we offer several methods of breaking your debt cycle, such as:
- Personal loans
- Debt consolidation
- Debt settlement
- Consumer proposals
Want to know how Loans Canada can help grow your credit? Take a look at this.
Do payday loans have a special interest rate?
I don’t have a bank account. Can I still get a payday loan?
Does taking out a payday loan hurt my credit?
We Can Help You Find An Alternative to Payday Loans
If you’ve been struggling with the decision to take out a payday loan or are looking for some much-needed debt relief, Loans Canada is here to help. We can connect you with the best sources for loans, other credit products, and debt relief in Alberta.