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Payday loans give you instant cash at the time you need it most. If you are contemplating getting one, you need to know how payday loans in Canada can get your finances back on track.
This advance cash can save your day. If you are in the middle of a financial crisis, it can relieve you from bigger trouble that may come your way. However, it’s not really a great option.
Check out what you need to know about the loan:
What is a Payday Loan?
Also called a short-term loan, it comes with high fees that make it harder for people to pay it. You can lend up to $1, 500.
The agreement is that you have to pay all that you owe to the lender in your next paycheck. If not, you’ll be in a big mess because the more it would be difficult for you to pay it. In Canada, there are several online and lending stores that offer it.
This short-term loan is considered the most expensive consumer type loan. It is also called an unsecured loan due to minimal requirements.
Know the difference between payday and installment loan. A payday loan is a fast cash solution that you’ve undoubtedly seen advertised on television or the internet.
Payday loans are commonly utilized by individuals who require a modest sum of money that must be paid back in a short time period. An installment loan, on the other hand, is a legal way to get cash when you need it most.
What are the Requirements for Paying the Loan?
All you need to do is to submit the requirements, including the statement of your income, a bank account, and proof of your address.
You also need to give the lender a post-dated cheque that sums up all the loans and fees.
It also comes with a pre-authorized debit agreement where you are giving them the authority to take out the loan amount plus the fees directly from your bank account.
How Much Does it Cost?
Consider the loan only if you don’t have any option left. If you still have other alternatives, you better take that loan.
Getting a loan can drain you financially if you don’t know how to manage it. Yes, it can solve your current financial dilemma, but what happens during the payback time can be exhausting.
Different provinces have different regulations when it comes to the loan. In Ontario, there is a law that protects borrowers, so that lenders cannot charge them high interest and fees. If you live in another province, ensure that you know your rights and legislation that can protect you.
Payday Legislation in Canada
Almost all the provinces have passed laws that protect borrowers. If you live in Labrador,
New Brunswick, Newfoundland, and Quebec, you must be careful when borrowing the loan because they don’t have laws regarding payday loans.
Here are some facts that cover some provinces that have regulations:
- There is no rollover. It is illegal to provide another loan if you haven’t settled the previous one.
- The interest is not higher than 23 percent. In some areas, $21 or 21 percent is applied for every $100.
- You can cancel your loan within two business days without any fees or charges.
- You can only take a payday loan from a lender.
Rules Concerning Payday Lenders
Keep in mind that different provinces have different regulations. These rules don’t apply to all states. Before getting loans, talk with the lender regarding their rules.
- They must have a license to operate.
- They cannot talk to anyone except you regarding your loan.
- They must not contact you more than three times per week.
- They must give you the complete details of your loan, including the amount you’re borrowing, the total cost, and the duration of your loan.
- They cannot ask for an automatic deduction or take a loan from your salary.
What to Ask Before Applying for a Loan?
Before considering getting the loan, make sure to ask these questions:
- Is the payday lender legit?
- Does it have a violation regarding the payday loan regulations in the province I live in?
- How much is the loan?
- Are there hidden fees?
- Do I have other alternatives?
Ask for a repayment plan before making a decision to take any credit, especially a payday loan. Don’t forget that it is very hard if you cannot pay your loan on time because it can affect your financial status in the long run.
If you have any questions regarding any lender in your province, you may contact the Consumer Protection Office in your place.