While Montreal is one of the largest and most beautiful cities in Canada, they have among the lowest median incomes in the country. This is largely due to lower economic growth in the region, but whatever the reason, many people in Montreal struggle financially due to these low incomes.
While many are able to secure standard loans to get the money they need, others in Montreal often need to rely on payday loans. Payday loans are smaller loans that are used to help people make it to their next payday. Approval is extremely fast and these loans are usually around a few hundred dollars up to a thousand.
There is normally a 14-day limit to pay back the loan. Now, all of this might not seem so bad, but because interest rates are always very high and the loan must be repaid in such a short amount of time, it’s incredibly easy for consumers to get stuck in the payday loan cycle of debt.
What is the Payday Loan Cycle?
The payday loan cycle is a scary place to be, but it is unfortunately all too common in Montreal and many other cities across the country. The payday loan cycle occurs when you take out a payday loan, but then you don’t have enough left on your next paycheck to pay off the loan, so then you have to take out another to cover the first.
This can continue and continue, making it hard to ever fully recover. This cycle can cost you thousands of dollars and could potentially take you months to escape from depending on your income and expenses you have. In order to break out of the payday loan cycle, you will have to make some lifestyle sacrifices at certain times to keep your head above water and not take out another loan.
To learn how to break the payday loan cycle, click here.
The Warning Signs of Predatory Lenders
While not every single payday lender in Montreal is predatory, many of them do indeed prey on those with no other options who really need the money. Unfortunately, if you aren’t super knowledgeable in the space it can be tough to know for sure whether a lender is predatory or not. Thankfully, there are a few things that we would classify as “warning signs” that a lender may be predatory.
Sky High-Interest Rates
If a lender in Montreal offers incredibly high-interest rates, it is usually a good sign that they are predatory. With rates this high, these lenders are simply trying to make money and not help anyone out or provide a service.
Wondering how you can beat your lender’s interest rate? Find out here.
Added Fees and Costs
Oftentimes, predatory lenders in Montreal will try to roll in a variety of different fees and costs into their loans, in order to make more money. This can be anything from credit insurance for loans to a variety of other things. The lender might pressure you into accepting these, but they are often just a way to get more money from you.
Read this for some facts about loan insurance scams.
Rushing You Through the Process
When getting any sort of loan, it is incredibly important to do your due diligence and make sure to always read the fine print. You need to truly understand and know what you’re getting into. If the lender rushes you through this process or tells you that you can skip certain sections, you should always be wary that they might be trying to take advantage of you.
Not Being Honest or Asking You to Lie
If you feel the lender is giving you misinformation or not giving you the whole truth, the lender is likely predatory. Also, if they tell you to include misleading or wrong information on your application, that is a massive red flag.
Looking for debt relief from predatory loans? Take a look at this.
The Credit Score Required for a Payday Loan in Montreal
In Montreal or any other city in the country for that manner, there is generally no credit score required to get a payday loan. So whether your credit is great or you are really struggling, you should be able to secure a payday loan.
Instead of using your credit score to determine whether to loan you money or not, many payday lenders in Montreal will look at your income, the fact that you are employed, your address, and whether or not you have a bank account.
It’s important to keep in mind that while good credit isn’t required to get approved for a payday loan, this doesn’t mean it’s a good option for you.
Check out this infographic to learn more about how credit scores are calculated.
Payday Loan Alternatives in Montreal
If you are curious about other options you have as opposed to expensive payday loans, be sure to reach out to Loans Canada and we are confident we can match you with the right loan and the best lender in Montreal.
