To help you navigate post-CERB Canada, here is everything you need to know about what government help is available to you in 2022.
The payday loan cycle is a serious obstacle that can affect many consumers. Nevertheless, these payday loans in Quebec are a common source of financing for a lot of residents in the province.
Payday loans are popular in Quebec because:
- They offer fast, often same day approval, which is good if you’re experiencing a financial emergency or you don’t have a credit card
- Your credit health is not a factor (no credit check is necessary)
- Proof of 3 months stable income, an active chequing account, and your home address are the only real requirements for approval
Payday loans are dangerous because:
- They come with extremely high-interest rates (sometimes 400-500% annual percentage rate), along with miscellaneous fees and penalties for defaulting
- Despite their relatively small amounts (less than $2,000), these costs make them the most expensive credit products in Canada
- You generally only have 14 days to repay the loan in full (the time until your next paycheck would arrive)
- If you don’t manage to make the 14-day cut-off point, your combined penalties, interest and debt could lead you down a steep path to the payday loan cycle
- Scammers and predatory lenders might use your need for fast cash as a way to commit fraud or identity theft, or to charge you ridiculous prices
Quebec Has Effectively Banned Payday Loans
Thankfully, the Quebec Government recently reduced its AIR (annual interest rate) limit to 35%. This has made it unprofitable and nearly impossible for payday loan lenders to operate legally within the province.
Having trouble understanding APR (annual percentage rate) and AIR? Click here.
Better Alternatives to Payday Loans In Quebec
Since payday loans in Quebec are now outlawed, if you’re looking for some relief from your debts, there are a few useful alternatives available all over the province, and some that we offer right here at Loans Canada. While your approval and interest rate for many of these options will depend on the health of your credit and finances, rest assured that when handled responsibly, they will likely be cheaper than the average payday loan.
Alternatives for Emergencies and General Expenses:
- Installment Loans – A form of personal loan, these are meant to be paid back through equally divided payments (although you can sometimes negotiate with your lender to make advance payments, reducing your loan term). Like payday loans in Quebec , they can be used to finance almost any expense you can think of but will come with a far lower interest rate, saving you more money in the long run.
- Credit Cards – As long as you don’t overuse them, credit cards are a simple, effective way to pay for the things you need. Just make all your payments on time and in full. If you can’t make full payments, at least try to remain above the designated minimum payment to avoid penalties.
- Home Equity – There are several different ways of accessing your home equity, such as a HELOC or a second mortgage. You can then use your equity to cover your expenses. Be warned, however, that with a second mortgage, your home may be held as collateral and you’ll have 2 mortgage payments to deal with. If you fail to make your payments on time, you could be risking a foreclosure.
- Car Title Loans – You can also use your car or another vehicle as leverage to borrow cash, assuming you’ve paid it off in full. Again, be very careful with this option, as your vehicle’s title will be forfeit in the event that you default on your payments for too long.
- Friends and Family – One of the simplest options of all, there’s no shame in asking the people you trust for a bit of financial aid!
Check out the difference between a payday and personal loan.
Alternatives for Serious Debt Issues:
- Debt Consolidation Loans – When your debts are reaching worrisome levels, the first step you can take is to apply for a debt consolidation loan through your lender. If approved, you will be borrowing one loan that’s large enough to eliminate most of your smaller debts, leaving you with a single payment to keep track of. However, these loans are not always easy to qualify for and not all types of debt will be covered, so ask your lender what you need to be approved. Will a debt consolidation loan look bad on your credit report? Find out here.
- Credit Counselling – While it’s not specifically reserved for Quebecers in serious debt, credit counselling is another beneficial service that can help you when you’re struggling with your finances. Even if all you want is a bit of financial education, licensed credit counsellors can make a huge difference in your life.
- Debt Management Programs – The next step you can try, with the help of your credit counsellor, is a debt management program. If your debt level is becoming uncontrollable, they can reach out to your lenders in an effort to negotiate a payment plan that works for your finances. However, not all lenders will agree to these programs, so ask your counsellor if this is the right path for you.
- Debt Settlements – Another method you can try on your own or with your counsellor is a debt settlement between you and your lenders. If the agreement goes through, your total debt should be reduced, then consolidated with one large payment or several smaller ones. Want to know how a debt settlement affects your credit? Take a look.
- Consumer Proposals – When your debt is so uncontrollable that no creditors will accept any other method of payments, you could try filing a consumer proposal. This is another instance where you may be able to settle your debt for less than you actually owe. However, in this case, you’ll have to work with a licensed insolvency trustee, who will draw up a legally binding contract between you and your lenders, where the terms are fair for both parties involved.
- Personal Bankruptcies – This service should truly be reserved for Quebecers who have no chance of paying their debts within a reasonable timeframe. If you owe too much and you’re being pursued by debt collectors, it may be time to consider your last resort, declaring personal bankruptcy. Again with your insolvency trustee, you’ll be entering a court agreement that relieves you of your debts in exchange for your assets (home, car, valuable property, etc.), followed by several years worth of payments.
Online Payday Loans In Quebec
While physical payday loan locations across Quebec no longer exist, you may still come across payday loan lenders who operate online. Be extremely careful, as this is one way that scammers and predatory lenders can still get their hooks into your finances. Since online sources are much harder to regulate, it’s difficult for the Canadian Government to get these websites shut down. And since payday loans are normally easy to get, many borrowers in desperate situations don’t consider the inherent risks before handing over their personal and banking information.
Watch this video to know how you can identify a loan scam.
Many legitimate payday loan lenders do have an online presence. That being said, if you’re determined to apply, always make sure to do extensive research into every lender’s background. If they seem to have a bad reputation, seemingly fake customer reviews, or their company doesn’t show up in the Better Business Bureau database, do not give them any information and walk away immediately.
Read this to know more about online payday loans in Quebec.
Are payday loans banned in Quebec?
What are the alternatives to payday loans in Quebec?
Can I still apply for a loan even with bad credit?
Payday Loan? No Thanks!
All this being said, you may still be wondering if a payday loan is the right way to go when it comes to your unique financial situation. Then again, maybe it’s better to go with a safer choice. That’s where Loans Canada can help. We can match you with an affordable payday loan alternative that can help you regain control of your finances.