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Have you ever heard of a “faxless payday loan”? Many people haven’t. Sure, you’re probably familiar with a “payday loan” or at least heard of it, but how does it differ from a faxless payday loan?
Or are they the same? In order to answer that question, it’s helpful to fully understand exactly what a payday loan is first.
What is a Payday Loan?
Basically, a payday loan is a type of short-term loan that consumers take out in order to cover a pressing expense that they don’t have enough money to pay for. They’re usually made for amounts no more than $1,000, and typically must be paid back by the time their next paycheck comes in.
These types of loans are also known as “cash advance loans” because payday lenders essentially advance you the cash you would be getting on your next payday.
Getting approved for a payday loan is rather simple, and no collateral is typically required. You just need to be over the age of majority in your province, have a steady job, have a bank account, and have valid and up-to-date contact information. No credit checks are done, nor any further financial checks.
While payday loans might be seen as somewhat of a lifesaver in times where cash is needed in an urgent situation, the interest rates that are charged are typically exorbitant. In fact, it’s not unheard of to see interest rates as high as 500% or more on payday loans. With rates that high, it can make it very difficult to repay the original loan amount plus the added amount in interest.
As such, payday loans are often seen as predatory in nature. They charge sky-high rates, often have other hidden fees, and don’t require much of a financial background check on borrowers.
In this way, even borrowers who might not be financially capable of repaying such loans are often approved. In fact, many payday lenders promise guaranteed approval, even for those who likely won’t be able to pay them back.
Check out our infographic about the Payday Loan Cycle.
What’s a Faxless Payday Loan?
A faxless payday loan is essentially the same thing as a traditional payday loan, except that the documentation required by the lender can be submitted electronically rather than having to be faxed. In this sense, the name makes a lot of sense.
Are you an Alberta resident? Click here to learn about some payday loan changes in the province.
Faxless payday loans are designed to make it very easy for borrowers to apply and get approved for these types of short-term loans. Without having to go through the hassle of faxing documentation, the process is simple and fast.
Are you an Ontario resident? Read this to discover the payday loan changes in this province instead.
Lenders can get the information they require within minutes and approvals can even be given within a couple of hours. Also, repeat borrowers with the same payday lender can go straight to loan approval without having to re-submit their paperwork, since the lender will already have it all on file.
Basically, all payday loans these days can be considered faxless. With the advent of the internet, it doesn’t take much to scan and email paperwork to anyone at any time. While you can still choose to fax your paperwork or visit a payday lender in person, just about every payday loan company accepts applications and documents via the internet.
For information about online payday loans, look here.
Faxless payday loans are certainly very convenient and can get you the money you need right away, but they come with the cost of soaring interest rates that can make these types of loans very expensive.
Shopping for low-interest rates? Here are some things to consider.
Alternatives to Faxless Payday Loans
Rather than applying for a high-interest faxless payday loan, there are alternatives you may want to consider. Perhaps the best alternative to a payday loan is a personal installment loan.
These types of loans are typically taken out at a bank or credit union and allow a much longer repayment period. Rather than having to repay the entire loan amount in one lump sum in a short time period as is the case with a payday loan, a personal installment loan allows the loan to be paid off in regular installments over an extended period of time.
In addition, the interest rates are not nearly as high as payday loans. This makes it much easier to pay off.
Check out our video for more differences between payday loans and installment loans.
Many Canadians find themselves needing fast cash to cover last-minute expenses and sometimes turn to payday loans to obtain the money they require. Faxless payday loans make the application and approval process simple and convenient by not requiring any documentation to be faxed or presented in person.
However, as easy as these types of loans are, borrowers need to be aware that they can be extremely expensive and very difficult to pay back in such a short amount of time.
Need some debt relief for your payday loans? Click here.
Before you take out this type of loan – or any other type of loan – be sure to do your due diligence and make a sound decision that’s best for you.
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