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Borrowing money is something that almost everyone will need to do at one time or another. This could be for an emergency, a car, a home, or even to simply help cover your bills. Even those who make a healthy amount of money might still need to borrow.
For example, while many people in Brandon and the rest of Manitoba are making much more than they used to, many still struggle to pay their bills and expenses.
While a standard personal loan works for some, others may need the money more quickly or may be unable to qualify for a standard loan. That is where a payday loan in Brandon can be of assistance. However, it is important to get all of the information before simply taking out a potentially-expensive payday loan.
What is a Payday Loan?
A payday loan is a short-term loan. Is it usually meant to hold someone over until their next payday. These loans are often for a few hundred up to $1500 and must be repaid within two weeks. Of course, this can vary depending on the payday loan lender you choose. The main draw to these loans is just how quickly you can get your money. In a matter of hours, many payday lenders will get you your money.
They are often used when people need money quickly and are normally paid back before the borrowers next payday. While they can help you out in a pinch, they often come with incredibly high-interest rates. These can sometimes rise up into the triple digits and have the potential to hurt you financially. As a result, be careful when considering a payday loan for your borrowing needs.
What is the Payday Loan Cycle of Debt and How to Break it?
One of the things to watch out for when using payday loans in Brandon is the payday loan cycle of debt. The payday loan cycle of debt is an unfortunate byproduct of relying on payday loans and can cripple you financially. In an effort to help you understand just what the cycle of debt is, we’ll break it down here. The process is as follows:
- You need money quickly and traditional borrowing options won’t work, so you take out a payday loan.
- The time comes to pay off the loan (plus interest), but you haven’t quite recovered enough.
- In order to pay off the first loan, you take out another payday loan to pay it off.
- The cycle continues as you constantly need to borrow more money to pay off your last loan.
This cycle can sometimes last many months or years and can ruin your credit, drain your savings, and stop your financial success in its tracks. So this cycle of debt can be incredibly harmful and annoying, but how do you go about breaking it? Well, there are a few different things you can do.
If you manage to, taking out a standard personal loan can help you escape the high-interest rates and strict terms of a payday loan. Also, there are some debt relief services that can be of great assistance. Whatever you do, you need to make sure to break the loan cycle of debt as quickly as you can. The longer you are stuck in the cycle, the worse it will become.
The Warning Signs of Predatory Lenders
While there are some honest and quality payday loan lenders, many payday loans in Brandon are predatory in nature. Because those getting payday loans don’t have many other options, predatory lenders and scammers will often prey on them. But how can you know if a payday loan, or any loan for that manner, is a scam or predatory in nature?
While scammers have gotten better at disguising their efforts, there are still some warning signs of predatory lenders. These include:
- Incredibly high-interest rates
- Asking for an upfront payment to “secure” the loan
- No physical address or online reputation
- Wanting you to lie, or lying to you
- Rushing you to sign or apply without answering your questions
- Guaranteeing approval for anyone, no matter what
- The entire thing seems too good to be true
These aren’t the only telltale signs of a predatory loan or lender but are the most common ones. If you encounter a loan that you feel uneasy about, it is a good idea to listen to your gut and steer clear.
Alternatives to Payday Loans in Brandon
So if there are many different drawbacks to payday loans in Brandon, what are some alternatives that one can use? Thankfully, there are several options available.
Installment Loan
A traditional installment loan is a good option to consider, as the interest rates will be far lower, and the terms won’t be as short. While the approval time will be longer than with a payday loan, you should still be able to gain access to the money you need within a short period of time.
Credit Cards
Another option is using a credit card. While they aren’t much better, and still have high-interest rates, their rates are far lower than most payday loans. This means they are a decent option for emergencies, but certainly should still be used responsibly most of the time.
Secured Loan
If you own your car or home, you can also use that are collateral to borrow some money. However, be sure to make your payments on time and in full, or you could lose your home or car.
Ask For Help From Friends or Family Members
Also, another option is to borrow money from your friends or family. While this isn’t always easy for some people to do, it can often be the best and most affordable option. Many of your loved ones will be willing to help you out and save you the hundreds or thousands you may have spent on interest.
So as you can see, if you need some money but don’t want to utilize a payday loan, there are several other options at your disposal.
When Does a Payday Loan Make Sense
While there are often alternatives that are better options than a payday loan in Brandon, there are some situations when a payday loan makes sense. One situation where a payday loan makes sense is if you need money, have no access to credit cards, and are confident that you can pay back the loan in full by the time the term ends.
Another is if you need the money for an emergency, and have no other place to turn. If this is the case, try to everything you can to ensure you can pay off the loan by the end of the term.
Of course, there are also some situations where a payday loan doesn’t make sense, of course. This includes when your monthly bills already take up most of your income, when your income is unstable or when you want to borrow money to buy something that you don’t need. You should only be borrowing money, especially in the form of payday loans, when you have no other options and know you will be able to pay it off on time.
Credit Score Required for a Payday Loan
If you feel a payday loan in Brandon is right for you, you may be curious about what sort of credit score is required to get one? In Canada, credit scores range from 300 to 900. The higher your credit score, the easier and more affordable it will be to borrow money. Your credit score is determined by your payment history, how long your credit accounts have been open, your credit utilization, and how often you apply for new credit.
However, when it comes to payday loans, many lenders won’t actually care what your credit score is. Instead, these lenders will look at a few other things before deciding whether they will lend you some money or not. They will look at your bank account, your income and if you have an address. As long as you meet their requirements, they will likely offer you a loan.
So whether your score is low or high, you should be able to get a payday loan.
The Right Payday Loan Alternative For You
Interested in being matched with a payday loan alternative that best meets your needs? Loans Canda can help.
