You can easily experience a financial crisis or quickly discover that the amount of your payment will not be enough to make ends meet this month. These are common situations. Some people might be tempted by a payday loan to keep afloat in these moments. On the other hand, it's rarely a good idea.
How payday loans work
In principle, payday loans offer you fast relief when you are living with a financial emergency. These loans are often short-term loans that amount up to $ 1,500 to satisfy unforeseen expenses under the agreement that you will repay the loan using your next payday.
We know how difficult it can be to make payments when you have trouble making ends meet between two pay periods. You're not sure what strategy to take to overcome this ordeal. Payday loan relief providers can be your right solution for your debt consolidation.
What should I know about the costs of the payday loan?
Although payday loan costs vary by company, the following costs usually are always present:
- Interest charges
- File opening fees
- Renewal fees
- File processing fees
- Penalty for refund in advance or late
- Service fees
- Verification fee
- Commissions and fees
If your payday loan is a considerable amount, the issuing company could extend your credit for a fee. It could also give you a new loan to pay off the old, so-called renewal. The payday loan allows you to borrow money against the promise of repaying it when you receive your next payday or your next regular income.
Most lenders do not do credit checks before granting a payday loan. As a general rule, they ask the person:
- To prove that she has had a job for three months;
- Provide them with proof of address, such as a utility bill;
- To provide them with information about their chequing account.
The repayment term of a payday loan is short: it usually varies from 14 to 28 days. The longest time you can get is 62 days, for about two months.
When a payday lender agrees to lend you money, you must sign a loan agreement. Signing there, you agree to repay the loan as well as the interest and fees charged by the lender.
Payday lenders charge a little bit higher interest rate and fees than banks, credit unions or credit card companies. If you need money for a short period, be aware that it would cost you less to use your credit card.
As long as your payday loan is not repaid, you can not get another one.
Usually, payday loans must be repaid at once, at the end of the term of the loan. But if the loan you request is your third or more in a 63-day period, the lender must offer you an extended payment plan.
It is important that you know how payday loans work before signing a loan agreement. For example, you must know clearly:
- What is the amount you borrow;
- What is the amount you must repay;
- How many days do you have to pay back this amount;
- How you must repay this amount;
- If you can cancel your loan agreement.
- Before applying for a payday loan, think about other possible solutions.
How can you put an end to the loan repayment cycle?
If you are caught in a payday loan renewal or depend on this loan to survive between two pay periods, you may consider the following options to regain control of your finances:
With the consumer proposal, you can create an affordable repayment plan for your unsecured debts, such as payday loans. Keep in mind that neither the Debt Management Program (DMP) nor the Debt Settlement Plan can release you from your payday loan obligations since these are not debt solutions authorized by the tribunal. Moreover, payday loan companies do not recognize them very rarely.
You can also use the expertise of our financial adjustment advisors, who will evaluate your financial situation without obligation. They will help you select the best option that will allow you to pay off your payday loan. You can request to receive a call from different payday loan consolidation experts or by completing the application form. No matter the nature of your financial problems.
In addition to the options you can do yourself, our licensed insolvency trustee will offer you other formal debt solutions, such as a debt consolidation loan, a debt management program, a debt management plan debt settlement as well as a consumer proposal. Before even considering bankruptcy, all options will be explored to find the one that best suits your situation.