The fast loan market is expanding in Canada. It’s an easy way to get money fast, but at a very high cost.
What Is The Payday Loan?
A payday loan, which some call a “payday advance,” is a short-term loan granted without a credit check, which you usually agree to pay on your next payday.
Although most creditors request a refund within 14 days, many companies that offer this type of pay advance allow you to choose different payment schedules, rather than paying off all of them on your next paycheck.
In general, the maximum amount you can borrow varies between 30% and 50% of your pay at the fourteen-month mark. If you apply for a fast loan online, the money will be deposited directly into your bank account, within 24 hours after the acceptance of your request.
For example, a payday loan of $ 100 for two weeks can cost between $ 15 and $ 25 in fees and interest, which equates to an annual interest rate of 390% to 650%.
How To Get A Payday Loan?
To get a payday loan, you will have to prove to the creditor that you have a steady job and a regular income, generally by submitting them to your most recent pay stubs.
Some lenders may agree to give you this type of microloan without a credit check if you show them that you are receiving government benefits such as employment insurance or you have other sources of income.
Creditors will also ask for proof of residency, identification and bank account information.
How Does The Payday Loan Work?
Once your quick credit application is accepted, you will need to sign a contract stating the loan values, credit and fees, and the date you will have to refund the cost. Take the time to read the agreement carefully before affixing your signature at the bottom of it. Besides, when applying for a payday loan, many lenders may ask you:
To provide a post-dated check, the amount of which is equal to the total amount of the loan including any additional fees and applicable interest;
Sign a form that authorizes them to make a withdrawal (a pre-authorized debit) from your bank account on the due date, when you receive your pay.
Although this is a quick and easy way to get money, the payday loan is a costly way to borrow, when compared to other forms of investments. Payday loans should be your last resort.