Monthly bills can sometimes feel like a huge financial burden, they need to be paid in full and on time every single month and the consequences of not doing so are daunting. In the event of an emergency or if you have debt that you want and need to pay off it can be tempting to simply skip a payment or two especially for your rent or utilities. But, skipping your rent or utilities even one time is the last thing that you want to do as it will only cause more stress on both you and your finances.
What Options Are Available to Cover Rent and Utilities?
When it comes to paying for your rent, utilities, and other necessary bills, you have several options to choose from. Obviously, covering these costs with cash is the best option, but when life happens, it’s nice to know that you have alternatives, such as:
Installment Loans – A standard credit product that almost every lender offers, this allows you to borrow a specific amount of money, which would be deposited directly into your bank account following approval. Over time, you would repay this borrowed sum through a series of payments with interest.
Vehicle Title Loan – Like an installment loan, this involves a sum of money that you can borrow from various lenders in Canada, only this time your vehicle (an asset) is used as collateral to secure it, often leading to more money and a better rate. The lender will claim temporary possession over the vehicle’s title until the loan is paid in full.
For more information about vehicle title loans, click here.
Line of Credit – Similar to a credit card, this involves a specific amount of revolving credit that you can withdraw from whenever you need, then repay on a monthly basis. When you pay off the full balance, the credit limit resets itself. However, if you wish, you’ll also have the option of making a minimum payment or multiple payments each month.
Friends and Family – If you’d prefer to avoid applying or have trouble qualifying for credit products, it might be a better idea to ask for a bit of help from the people you trust. Although borrowing from friends or family is not always the easiest thing to do, it may be the cheapest and least complicated option for paying your rent or utilities.
Are Debt Issues Preventing You From Paying Your Bills?
Dealing with various types of consumer and household debt can be an expensive, time-consuming ordeal. In fact, the inability to properly manage your debt could be the same reason that you’re finding it difficult to make rent or pay your utilities on time.
Since having both of those problems in your life can cause a lot of unwanted stress, it’s best to try and quickly consolidate as many of your outstanding debts as possible, whenever you have the opportunity. Don’t worry, because there are many debt management solutions in Canada that can give you that exact opportunity, such as:
Debt Consolidation Loans – This type of loan is meant specifically to reduce high-interest debt but functions in the same fashion as a regular installment loan. The overall goal would be to use it to pay down multiple debts in one go, thereby leaving you with a single monthly repayment plan and interest rate to keep track of.
Debt Management Programs – This involves a similar process and final result as the loan type above. However, for this option, you’ll need to work with a trained professional. Here, a credit counsellor would negotiate a deal with your creditors that helps you consolidate your debts using monthly payments, which may be preferable because you won’t have to take out a loan and you’ll receive professional advice along the way.
Avoiding Payday Loans to Cover Rent and Utilities
If you’re having difficulty paying your rent and utilities, you might be considering another option that exists in Canada, known as a payday loan. Like a regular loan, this would be a lump sum of liquid money that’s deposited directly into your bank account, which you would repay over time.
However, a payday loan is different because you can usually only borrow $100 – $1,500 and very minimal paperwork is required for approval. So, borrowers with bad credit, low income, and debt-related problems will find it easier to qualify than they would with a normal loan. The process does not involve a credit check, no security will be necessary, and the funds can be transferred in as little as 1 – 2 business days.
Despite all these positive aspects, payday loans should only be considered as your last resort due to the following kinds of risks:
- Most payday loans come with extremely high-interest rates, the price of which will vary from province to province ($15 – $25 per $100 you borrow).
- Repayment dates are only 14-days after the funds have been deposited, which can quickly lead to uncontrollable debt.
- Many lenders will automatically withdraw the full loan cost from your bank account when it’s due and a penalty will apply for non-sufficient funds.
- Some provinces allow ‘rollovers’, meaning you can borrow a second loan before your first is paid (this can also result in severe debt).
- Predatory rates, scamming, and identity theft is all possible dangers, as payday lenders are harder for the provincial and federal governments to regulate.
Essentially, taking out a payday loan is only a good idea when you’ve got very unhealthy finances and exhausted every other option for paying your rent and utility bills. Only apply for a payday loan if you’re absolutely sure that you can afford all the associated costs by the end of your 14-day term.
When it comes to payday loans, it’s important that you know your rights.
How to Choose the Best Rent and Utility Loan
Although there are several options you can choose from when financing your rent cheques and utility bills, not all of them are the best choice for your particular financial situation. So, it’s a good idea to research and compare your options carefully before you actually apply yourself to any of them.
As you do that, be sure to take the following factors into consideration:
How much money do you actually need?
While you may need enough financing to cover both your rent and utilities, it’s not smart to apply for more credit than you can comfortably afford to pay back.
Is this a one-time requirement or do you often have trouble paying bills?
As beneficial as some credit products can be, relying solely on them to cover your rent and utilities can force you to rapidly accumulate debt.
What financial issues are preventing you from paying your bills?
Depending on how bad your situation is, you may just need to take simple precautions, such as saving more income, formulating a proper budget or cutting back on unnecessary expenses.
What interest rates are you being offered?
The interest rate you pay will vary from lender to lender and can definitely drive up the price of your credit product. Before applying, it’s essential to ask your lender what rate they are willing to offer you, then factor it into your budget to see if you can afford it when it’s combined with your regular payments. That said, the healthier your finances and credit are, the more affordable your interest rate will be.
Is your credit score high enough to get approved for an affordable loan/product?
A credit check may be part of your lender’s approval process. Keeping your credit score within the good range (660 – 900) is one of the best ways to secure a large amount of credit, a low-interest rate, and a more adjustable repayment plan.
Will an extra set of monthly payments increase your financial strain?
Remember, a credit product that’s beyond your budget can result in unwanted stress if you cannot afford the associated costs, along with all your other regular expenses. If your interest rate ends up being too high or your repayment plan too long, it might be safer to look for another solution.
Are you able to find a reputable lender to work with?
Prior research is critical when selecting a lender, as there are many predatory organizations and scam artists in Canada who want to take advantage of your need for credit. Before you give them any personal or financial information, make sure your lender:
- Is listed in the Better Business Bureau database
- Has a valid provincial business license and address
- Charges interest rates that are below the provincial limit
- Displays all their product costs through advertising and contracts
- Does not charge any fees prior to depositing your approved funds
- Does not claim to have a 100% approval rate
Need Help Cover The Cost of Your Rent and Utilities?
A loan from one of our many flexible lenders will allow you to pay your rent and your monthly utility bill on time so that you won’t have to pay any extra fees. Loans Canada offers easy and affordable installment plans and great customer service. We want you to regain control of your finances and we will be there every step of the way to help you.