With payday loans, borrowers can get quick cash for emergencies within 15 minutes to 24 hours. There’s no credit check, and all that’s needed is a monthly income.
Payday loans are a way to cover unexpected expenses that can’t wait until payday. There are no restrictions on how this personal loan is used.
Generally, one can borrow from $100 to $1,000 depending on income. Most often a borrower will need to have a monthly income of at least $1,500 to qualify. One must also be at least 18 years of age and a resident of Canada. The borrower must have a bank account and agree to the loan terms set forth by the lender.
Payday loans can come in handy when an auto needs immediate repair or when a major household appliance breaks down and needs replacement.
Payday loans can be used to cover emergency medical costs or for household repairs like plumbing or roofing services. Payday loans can be used to avoid bank overdrafts or to make credit card payments.
Are payday loans better than overdraft debt?
When Are Payday Loans A Good Option?
Also known as cash advances, payday loans are secured by the borrower’s paycheck or other income. They are meant to cover short-term cash flow problems. They are not intended to be a long-term solution to chronic cash shortages.
The interest rate on payday loans is high, usually from $15-$30 per $100 borrowed. On the upside, payday loans are available immediately and, unlike bank loans, good credit is not required.
If a borrower just needs a quick loan to cover an unanticipated expense until payday, speedy access to emergency funds can make up for the high interest.
The sooner a payday loan is repaid, the lower the interest will be. If a borrower needs the loan for a longer time, a traditional bank loan would be a better choice.
If the payday loan is not repaid as agreed, and extensions are needed for repayment, the interest charges can get costly. There may be penalty fees in addition to interest on missed repayments.
After a payday loan has been approved, borrowers are under no obligation to accept the loan. It’s always a good idea to shop around for the best terms, although most payday loans charge roughly the same rate of interest.
Repayment is usually expected within 30 days or less. Payday loans are available 24/7, including bank holidays.
Are Payday Loans Safe?
Application is easy. Borrowers complete a short, online application on an encrypted webpage and are then presented with lenders who are willing to extend the loan.
A borrower must agree to the terms offered by the lender, and then the loan amount is deposited into the borrowers bank account.
To avoid extra charges, borrowers should be able to repay the entire loan amount by the due date. The repayment is automatically deducted from the borrower’s bank account on the next payday.
Before entering personal information to secure a payday loan, borrowers should be sure that the webpage is secure. Look for “https” in the web address and a lock icon on the bottom of the webpage.
You can check the identity information of a website by clicking on the far left side of the address bar where the identity icon is displayed.
For more information on conducting transactions on safe sites see this article.
What If The Loan Cannot Be Repaid On Time?
If a borrower finds that repayment as agreed is not possible, they can usually pay a partial amount along with extra interest on the unpaid amount.
If none of the loan can be repaid until a later date, the interest must be paid and more interest will be charged on the length of the extension period.
While payday loans can be a blessing, the borrower should always review the loan contract very carefully before accepting the loan. That way, unexpected expenses can be avoided, and the borrower will know exactly what obligations and responsibilities are involved.