📅 Last Updated: December 9, 2021
✏️ Written By Lisa Rennie
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Sometimes our bills can pile up so quickly – often before we collect our paychecks – that it can be really difficult to cover all of our costs of living. When that happens, a lot of consumers in Saint John turn to payday loans for an immediate solution to their financial woes until their next paycheck rolls in.

But what are payday loans, exactly? And are they a viable option for a loan? Read on to find out everything you need to know about payday loans in Saint John.

How to Break The Payday Loan CycleCheck out this infographic for an in-depth look at the payday loan cycle.

What is the Payday Loan Cycle?

Payday loans are unlike most other types of loans in that they typically need to be repaid within two weeks. There are no options to pay in installments, so the payday loan cycle is certainly very short. Generally speaking, these types of loans need to be repaid once the borrower in Saint John receives their next paycheck.

The cycle can be very difficult to break because of the short time period to repay the loan. As such, it’s not uncommon for borrowers in Saint John to continue taking out payday loan after payday loan in order to repay the previous loans they’ve taken out. As you can imagine, the amount owing continues to mount – plus interest – so breaking this cycle is often extremely difficult, if not impossible.

Can The Cycle Be Broken?

To break out of this cycle, it’s so important to pay the debt in full and on time without rolling the loan over into a new one. This is always the first course of action that should be taken. But if you can’t swing that, there are other options to employ.

Take out a personal loan. Rather than taking out another payday loan with an exorbitant interest rate and perpetuating the cycle, consider taking out a personal loan instead. These will allow you to pay in installments until the loan amount is repaid in full, and usually come with much lower interest rates than payday loans. Then, you can use the funds from your personal loan to pay off your payday loan in full and bid it good riddance once and for all.

Consider a debt relief service. There are services like these in Saint John that are designed to help alleviate consumer debt. Some of them are educational and help consumers make the right financial decisions to relieve debt.

Others involve negotiating with creditors and lenders to waive the loan amount, or at least reduce it to a more workable amount. Some debt relief solutions may also involve renegotiating a lower interest rate to make it easier to pay back the full loan amount.

Payday Loan Alternatives in Saint John

Rather than risking getting into a payday loan cycle, consider other loan alternatives in Saint John that are much safer and more affordable:

Installment loans – As mentioned above, installment loans allow you to repay your loan amount in installments and usually come with much lower interest rates.

Borrow from friends or family – If you have anyone in your life who is willing to loan you some money on a temporary basis, this might be a much better way to go. Even if they charge you interest, they’ll likely not charge you anywhere near as much interest as payday lenders would.

Home equity loan/home equity line of credit – If you own a home and have a certain amount of equity built up in it, you may be eligible to borrow against your home’s equity at a relatively low-interest rate.

Click here to learn how you can build home equity.

Vehicle title loan – If you outright own your vehicle and don’t have an outstanding loan on it, you may qualify for a vehicle title loan, in which you use your vehicle as collateral for the loan.

Credit cards – If you’re really pressed for money, consider using your credit card to cover your expenses. Even though credit card interest is usually extremely high, it’s likely much lower than that of payday loans. In a true emergency situation, these might work as an alternative.

Wondering if you can hide your credit card purchases? Find out here.

Be Wary of Predatory Lenders in Saint John

The loan industry is made up of many reputable and trustworthy lenders, but there are also a number of predatory lenders who prey on consumers and intentionally try to get them sucked into the unending loan cycle.

The payday loan sphere tends to be more infiltrated with such lenders, so it’s important that you understand the warning signs of such lenders in order to avoid getting scammed. Some warning signs of predatory lenders include:

  • Triple-digit interest rate
  • Short minimum loan term
  • One balloon payment
  • Loan extensions and rollovers
  • Mandatory arbitration clause
  • Hidden fees

Keep an eye out for any one of these red flags before you decide to take out a payday loan.

Payday Loan Interest Rates in Saint John

The interest rates on payday loans in Saint John tend to be the highest in the lending sphere. These types of loans range in size from anywhere between $100 to $1,000, and the average loan term is approximately two weeks. Interest rates on payday loans usually cost about 400% annual interest (APR) or higher. Finance charges range from between $15 to $30 to borrow $100.

Can’t deal with rising interest rates in Canada? Try reading this.

Payday Loans vs. Personal Loans

There are a few distinct differences between payday loans and personal loans, including the following:

Interest rates. As mentioned already, interest rates on payday loans are usually a lot higher than the average personal loan.

Terms. Payday loans in Saint John come with very short terms, usually no more than two weeks. Personal loans, on the other hand, come with longer payment terms, making them easier to pay off.

Payment schedules. Unlike personal loans – which are paid back in installments – payday loans are paid back in one lump sum.

Loan amounts. Payday loan amounts are not very high and are usually maxed out at a few hundred dollars. Personal loans, on the other hand, can be made for as much as tens of thousands of dollars, depending on the lender and the borrower’s credentials.

Here’s how to get the best personal loan for you in 2018.

Payday Loan Rules in Saint John

Each province and territory in Canada has its rules associated with payday loans. In New Brunswick, the maximum cost of borrowing for a $100 two-week payday loan is $15, and the cooling-off period to cancel a payday loan is 48 hours, excluding Sundays and holidays.

Online Payday Loans

While there are plenty of brick-and-mortar payday loan shops available in Saint John, borrowers also have the option to obtain payday loans online. They’re relatively easy and incredibly convenient to apply for. Simply submit the same type of documentation that in-person payday lenders require, and you can get approval shortly after applying. The funds that you are approved for will then be deposited into the account you provide.

Looking for more information about online payday loans in Canada? Click here.

What Credit Score is Needed to Get a Payday Loan?

Unlike conventional loans, payday loans don’t require a specific credit score for approval. Borrowers generally don’t have to prove that they have a healthy credit score to get approved. Instead, payday loans are provided based on job status, a current and valid address, and a bank account.

Looking For a Payday Loan Alternative in Saint John?

Are you in need of a loan to cover a pressing expense? While there are certainly payday loan options available, you may find that other alternatives may suit you better. Get in touch with Loans Canada today to find out what other loan products may be available to you in Saint John and get the funds you need to cover life’s biggest expenses.

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