If there’s one financial service in all of Canada that won’t turn you down in your utmost time of need, it’s a payday loan. Even friends and family draw the line somewhere. And sometimes even the most immaculate of credit histories cannot get you a loan right away. Unless it is a payday loan!
A Payday loan is the only source of cash that can be instantly made available to help you settle a debt, fund your small business, or help pay for an emergency. The loan amount is usually small (under $1500) and in most provinces, the payback period is set at 14-days (or until your next payday).
These short-term loans, when used effectively and paid promptly, can be quite useful in helping individuals out of tricky financial situations. In recent times, payday loans have gotten a bad rep but these loans are still widely popular and when used correctly have helped many individuals better manage their financial obligations.
Instances When One Can Rely On Payday Loans
Let’s explore all the possible situations where a payday loan could prove to be a beneficial option for your financial needs.
1. When You Have Bad Credit
Those that have poor credit history are likely going to be rejected by most traditional lenders. Luckily, payday loans aren’t like traditional lending. This form of short-term loan is unsecured, meaning you don’t have to put up any capital or collateral for the amount borrowed and more importantly doesn’t require a credit check.
This means that even if you have bad credit you can still get a payday loan as long as you have a stable income. Different Canadian provinces have different regulations regarding payday loans. However, in most provinces, you can usually take out a loan of up to 50% of your next pay cheque (for a max. of $1500).
Taking out a payday loan also doesn’t have any impact on your credit report. This is one of the main reasons why this type of loan is so popular. For most Canadians protecting their credit score can mean hundreds of dollars in interest savings.
Payday loans offer an almost ‘off-the-books’ solution to acquiring money when you need it without it impacting your credit score. That is as long as you pay back the borrowed amount along with interest and fees in the required time frame.
2. When You Don’t Have Time for Paperwork
Say you need a loan of $1500 and there’s still some time until you receive your next pay cheque. If you choose any other line of credit for this loan, you’d have to get out of the house, pay for gas, fill out a few forms, and perhaps even go through an interview before your loan application is approved. The process could take days or even weeks!
Luckily with Red payday loans, you can put all these inconveniences of traditional banking to rest. Whether you opt to visit a storefront or choose to apply for a loan online from the comfort of your home, you will likely receive the borrowed amount directly deposited in your account within a max. of a few hours.
3. When You Are A Working Student
If you are an 18-year-old Canadian without a credit history to back you up or a co-signer, a payday loan will still lend you the money you need.
As long as you have a valid ID, an active bank account, are of legal age, and have a part-time or full-time job you should be able to take out a payday loan of up to 50% of your monthly or bi-weekly income from your nearest cash advance store or online through many trusted websites and lenders.
4. When You Don’t Want to Stay In Long-Term Debt
Payday loans are strictly meant for the short term. The high-interest rate is there to make sure you don’t drag it for more than a few weeks or months.
It is highly recommended that you only take out a payday loan when you have a sure way to pay it back within a short period. With all that in place, you’d be out of the payday loan debt within weeks or a month at most.
On the contrary, other loans with their relatively lower interest rates put you in a fake safety blanket, making you think that it’s a long-term loan and you can always pay it later. As a result, you constantly live with a debt hanging over your head.
5. When You Don’t Have Collateral
Most loans are secured, which means that the lenders have temporary rights over your personal property or assets until you pay off your debt. This is referred to as collateral.
However, not everyone needing a loan has valuable personal property or wants to purchase a house or a car with the borrowed amount. Those wanting small loans to ease them through short-term financial hurdles will find payday loans to be by far the most suitable option.
6. When You Need the Money For Various Expenses
One advantage of a Payday loan, which doesn’t get the attention it deserves, is the right to spend the borrowed money wherever you want to. Whereas auto loans, house loans, etc. are strictly limited.
With payday loans, you can take care of several expenses at once. For instance, you can pay your rent, buy groceries, and get your car fixed with the money borrowed. No one will question you about where you have spent that money or why.
7. When You Want Flexibility
The sooner you pay off your payday loans, the better. It is a short-term loan after all. If you want to pay it off early, you can do so without any prepayment penalties.
Many Payday lenders in Canada will also give you a choice to make your own repayment plans. That way, you can pay off your loan in a comfortable, timely manner without falling into a vicious cycle of delayed payments resulting in high interest and fees. By doing so, you pay less interest over the life of the loan, making it a lot more affordable.
You won’t find this flexibility with other types of loans.
There are lots of myths, rumors, and misunderstandings related to payday loans. In truth though, payday loans are sometimes the only source of credit readily available that can help you in your hour of need.
Don’t forget, that the key to successful borrowing is making wise decisions, reading the fine print, and ensuring that your lender abides by Canada’s provincial regulations.