While payday loans may seem like an extremely convenient and maybe even affordable way to borrow a small amount of money as quickly as possible, they are in fact one of the worst lending products you can get.
Everyday Canadians all across the country deal with financial issues and emergencies, their cars break down, they have to take expensive last minute trips to deal with family emergencies, and they lose their jobs. All of these things are financial straining and often lead to payday loans. The issue is, payday loans aren’t the solution that these Canadian need, they are the problem.
The True Cost of Payday Loans
Applying for and getting approved for a payday loan is a deceptively simple process. All you need to do is request a loan from a payday lender, either in person or online, have a bank account, be at least 18 years old, and be employed or have some form of guaranteed income. Have all that and you’re basically guaranteed a loan.
While this might all sound not so bad to you, the problem with payday loans is that they create a cycle of debt, one that is almost impossible to get out.
The Payday Loan Cycle of Debt
When you take out a payday loan you must pay the full amount back before or on your next payday. This means you need to pay off the full loan plus fees and interest. So what happens if your paycheque isn’t enough to cover all your regular expenses plus your payday loan? This is exactly when the cycle starts for most consumers. Often they must take out another payday loan (if the province they live allows this) or another type of high-interest loan to pay off their first loan. This cycle can often go on for years.
Canada’s Number One Alternative to Payday Loans
Loans Canada is the country’s number one alternative to payday loans. We’ve partnered with lenders and service providers all across the county to provide our clients with the loan, credit, and debt relief products they need so they don’t fall victim to the payday loan cycle of debt.
If you’ve been thinking about taking out a payday loan or if ever in the future you need access to money quickly, please consider any of the following options before you decide to take out a payday loan.
- A small installment loan
- A line of credit
- Tap into your home equity
- Borrow from a friend or family member
Looking for An Alternative to Payday Loans?
If you’re interested in more information about the loan options available to Canadians looking to stay away from the payday loan cycle, Loans Canada can help.