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Being a resident of any major metropolitan area of Canada can be expensive. Saskatchewan’s capital city of Regina is not much different. While housing in Regina isn’t as pricey as other cities, typical living costs certainly can be, especially when you consider all the everyday expenses the average Canadian has on their plate. Unfortunately, this is where the idea of payday loans in Regina can become appealing. Not sure what a payday loan is or why they can be so unfortunate? Keep reading.
Click here to learn more about the loan process in Regina.
Why Would a Regina Borrower Want a Payday Loan?
On the surface, payday loans in Regina may seem pretty appealing because:
- They are very easy to get
- They come in relatively small amounts ($1,500 or less)
- Small loan amounts means you’ll have an easier time paying your balance back
- No credit check is required. Bad credit borrowers will have no approval problems
- Only proof of your employment, address, and a chequing account is necessary
- Your payment period will only be two weeks long
- Same day approval is common, making them good for critical financial situations
Don’t apply for a loan before you read this!
Why Wouldn’t a Regina Borrower Want a Payday Loan?
As appealing as they seem, there are quite a few ways that even one payday loan can be extremely bad for your financial health, including but not limited to:
- They come with very high interest rates (as much as 23% in Saskatchewan)
- Many administrative fees will also apply, making the loan even more expensive
- Hefty penalties are imposed for borrowers who don’t pay back their loan on time
- The possibility of predatory lending, scamming, and identity theft is high
- Since they’re so easy to get, it’s tempting to rely solely on payday loans
- The resulting payday loan cycle can be very hard to break once you’re stuck in it
Why is Breaking the Payday Loan Cycle So Difficult?
As we mentioned, it can be all too easy for a Regina borrower to succumb to the payday loan cycle. Actually, the reason they got stuck in the cycle and the reason they applied for the payday loan in the first place may be directly linked. Generally speaking, people apply for payday loans in Regina when they have no other option. Maybe they have very bad credit or a low income, causing them to be denied for credit by their bank or other lender. Then again, maybe they’re just unaware of the inherent risks involved with payday loans in Regina and are caught off guard by how appealing they sound.
The payday loan cycle is particularly harmful to those with bad credit and low incomes. Those unsuspecting borrowers don’t fully consider the consequences of their actions and assume that they’ll be able to pay off the loan when their next paycheck rolls around. However, they have other expenses to deal with, so they come up short and miss their payment date. Late penalties then apply. Even if the borrower manages to repay their full payday loan, they may need another one to cover their other unpaid expenses. Therefore, the cycle continues and sometimes never ends.
Check out this infographic for more details about the payday loan cycle.Why is the Possibility of Scamming and Identity Theft So High?
Again, if a Regina borrower has poor credit and finances, it can leave them vulnerable to many forms of “predatory” lending. The goal of these lenders (usually fake organizations) is to prey upon those who are desperate for cash, often because they can’t get it elsewhere. Maybe they have a financial emergency on their hands (lack of rent, car accident, medical issue, etc.). Whatever the reason, they don’t think things through or research their “lender” properly. That desperation has now caused them to give away their vital financial information. And the result? Identity theft and/or fraud.
Here are some telltale (and illegal) warning signs of predatory lending:
- They charge more than 23% interest ($23 per $100 borrowed)
- They charge a deposit before approval for “insurance” purposes
- They offer “rollovers” (approving a second loan before your first is complete)
- They don’t have detailed advertisements (displaying all costs)
- They don’t have detailed loan contracts (displaying any additional loan details)
- They won’t answer your questions properly
- They use abusive or otherwise manipulative language and sales tactics
- They aren’t listed in the Better Business Bureau database
- They have no real customer reviews or reputable background
Need some debt relief from predatory loans? Look at this.
What Other Rules Do Legal Payday Loan Lenders Have to Follow?
To know some of the rules that payday loan lenders must follow to operate legally in Regina and the rest of Saskatchewan, simply look at the predatory risks above and assume the complete opposite. For instance, no legitimate lender is allowed to charge more than 23% interest. Every lender must also have advertisements and contracts that display EVERY cost associated with the loan. Additional payday loan rules include:
- A grace period of 48-hours must be offered, during which you can cancel your loan, free of charge.
- All lenders must possess a valid business license through the Provincial and Federal governments.
- No lender is permitted to ask for assignment of wages or automatic deduction from your paycheck.
- No lender is permitted to contact you more than 3 times per week or discuss your loan with anyone other than yourself.
For more information about your payday loan rights, check this out.
When Would a Personal Loan Be a Better Choice?
Almost always. While the application process is more strict, personal loan approval can acquired through alternative, private, and bad credit lenders, assuming you were denied by your bank or another prime lender.
Personal loans aren’t always beneficial because:
- A credit check is sometimes necessary
- Credit checks lead to hard credit inquiries, which can reduce your credit score
- Interest rates can still be high if you have bad credit
- Longer payment schedules and larger payments will put you in debt longer
- Defaulting (short, late, or missing payments) can result in even more debt
Click here to learn about loans in Canada that don’t involve credit checks.
However, personal loans are definitely more beneficial because:
- You can request much larger credit amounts than any payday loan will give you
- Bad credit interest rates, while high, are not nearly as expensive as payday loans
- Payment amounts, frequencies, and schedules are usually up for negotiation
- They can be very good for your credit when payments are made responsibly
- Long-term schedules allow for longer, a more responsible credit history
- Improving your credit gives you better financial strength, as well better approval chances and interest rates for future loan products
Looking for a bad credit personal loan? Read this first.
What Alternatives Can Help Me Avoid Payday Loans?
The good news for Regina borrowers is that there are a few alternatives to payday loans. While these options are not accessible or appropriate for everybody, they are likely to cause less financial damage than the average payday loan. Here are just a few ways you can avoid that type of damage:
Borrowing From Friends or Family
While not always possible, if your friends and family are more financially stable than yourself, it can’t hurt to ask. Just make sure, if they do accept, that you can afford to pay them back someday in order to avoid any strain on your personal relationships.
Vehicle Title Loans
This option only works if you own a car or other vehicle outright. If so, you can offer your vehicle’s title up as collateral to secure a loan at a more reasonable interest rate. Again, be very careful here, if you can’t afford your payments and don’t at least inform your lender, your vehicle’s title may be forfeit as compensation.
Interested in applying for a vehicle title loan? Look at this.
Secured Credit Cards
As we said, one of the main reasons you might apply for a payday loan in Regina is because you don’t qualify for other financial products, such as a credit card. If so, a secured credit card might be much easier to obtain, as they are generally reserved for bad credit borrowers. A security deposit equal to your desired credit limit is required for approval. You can then use the card to improve your credit and collect said deposit when your final balance is paid and your card is expired.
What’s the difference between a secured credit card and a prepaid one? Find out here.
Guarantor Loans
Another option for bad credit borrowers is the guarantor loan, which works more or less like a personal loan, in that you would repay it through equally divided installments with interest. The major difference here is that a guarantor with good credit and financial health needs to cosign your loan before approval can be reached. Your guarantor’s financial profile will then be the determining factor, rather than your own. Just make sure that your guarantor is aware that your payments will become their responsibility if you can’t afford them. This means they’ll also end up in debt, potentially harming their own finances and credit.
Can I Get Debt Relief From My Existing Payday Loan Debt?
Of course you can! Since payday loan debt can be terrible for your finances, it’s best to act quickly and eliminate it however you can. Depending on how much debt you actually have, these debt relief services can be very helpful. Here are a few of those solutions, many of which work just fine for Regina borrowers with less favorable finances:
- Debt consolidation loans and programs
- Home equity loans and HELOCs (home equity lines of credit)
- Debt settlements
- Credit counselling
- Consumer proposals (only when your debt is becoming unmanageable)
- Personal bankruptcy (only when you have absolutely no choice)
How Can Loans Canada Help Me?
We’re glad you asked. If you’re looking for a healthier alternative to payday loans in Regina or you’ve been struggling to get rid of the debt they’ve already caused, Loans Canada is your go-to source for affordable solutions. Apply today!
