The Financial Consumer Agency of Canada (FCAC) states that approximately 90 percent of Canadians are taking on payday loans. Payday loans are being taken on by Canadians to cover standard household expenses or avoid late charges. A payday loan is a small amount of money lent at a high rate of interest that is paid back on the borrower’s next payday.
Reason Why To Avoid Payday Loans
There are a few sound reasons why Canadian consumers are asked to avoid payday loans. Not only do payday loans have higher interest fees, the fees are substantially higher than what would be charged on a regular loan or line of credit.
Another thing to look out for is that if your cheque or pre-authorized debit payment doesn’t go through. If this happens, additional fees could be charged by both the lender and your financial institution. Considering that your payment doesn’t go through, the amount of money owed will continue to accumulate interest.
If these red flags are not enough to turn you away from payday loans, here are a few more things to consider. The lender could unintentionally contact friends, family, or even your employer in attempting to collect the loan from you.
Your payday loan can also be sold off to a collection agency. If your payday loan is sold off, your credit score would be negatively affected. The collection agency could then have you sued which could result in either having your wages garnished, or your property seized.
Alternative Options To Payday Loans
You don’t have to consider payday loans to be the only answer. There are a few things to consider before even thinking about taking on a payday loan. Always consider contacting lenders before the payment date to see if you can get more time. You could also attempt to ask your employer for a pay advance or to cash in on your vacation pay.
These are important things to consideration when looking at your personal finances. If you are already thinking about taking on a payday loan to cover your necessary expenses, you might need some help.
We are Licensed Insolvency Trustees that have extensive experience in addressing financial issues and challenges such as those above as well as all the questions you may have, including managing credit.
Feel free to email us at email@example.com, call us at 416 736 4357 (HELP), or fill out the contact form on this website, to book a free, no-obligation consultation with one of our debt solutions’ experts.
Make an appointment today, and we will provide some solutions specifically tailored to your situation. We look forward to assisting.