Coming close to the end of the month and realising that you are not going to make it is a terrible financial confrontation. In a case like this, it may not be necessary to take out a personal loan, as there are some options. One popular one for residents is a payday loan, which is a very short-term loan that is taken out against your salary.
According to official government reporting, there are almost 2 million Canadians who utilise payday loans every year. This figure has increased rapidly over the years, with payday loans at the turn of the century being the most rapidly increasing credit system. As more than half of consumers reported a $500 loan or less lending agreement, it is unsurprising that regular users appreciate a much-needed cash-injection solution.
There are various reasons you could need a short-term loan, with many borrowers attributing their use of loan services to unexpected expenses, such as car repairs. During a month when there have been unusually higher expenses or a need for emergency funding, many people are reluctant to take out a personal loan (certainly if they already have one) or contact a loan shark to access cash.
It is of wide interest to know more about the reasons individuals might need a payday loan, with the first and most important factor being that cash is needed immediately.
Fast loan pay-outs
Being able to access money quickly is incredibly important, as households or individuals late on rent or a mortgage repayment, or possibly needing to make emergency payments will be granted access to a requested cash amount against their salary.
Applying for a payday loan, especially with so many companies operating online only, can be incredibly fast. In the past, you may have had to wait some hours before you would know whether your agreement was approved, and only then would you have access to the loan cash value. Because technology has improved the speed at which online loan agreements can be signed and approved, now, certain online service providers can grant the cash sum within a couple of minutes!
After seeing how efficient this instant channel is for accessing cash, we can begin to understand how significant this option is, particularly for individuals who would otherwise not be eligible for more traditional credit systems applications.
Poor credit history
Safe and secure
With regards to loan sharks and lending from unregulated credit providers, acquiring a payday loan through a legitimate company gives the borrower some security in knowing their transaction is legal and regulated.
Importantly, individuals who apply for payday loans may not want their other service providers, place of work, or even families to know that they have secured extra spending money this way. In this case, payday borrowers can be secure in a confidential transaction with a payday lender. With more than 1400 independent retails stores operating in Canada alone, someone needing a loan can contact a lender directly and feel at ease about the safety and confidentiality of their agreement.
There is always the risk that an inability to repay your loan will result in a fine, in the form of increased repayment fees. Another fear is that being unable to pay back the borrowed money could have your lender escalate your case to a collection agency, which could see your property being seized or you being sued. There is also a very real risk of a debt trap, where falling behind on repayments leads to a continual inability to repay another loan requirements.
Canadian authorities are very clear to encourage responsible lending and borrowing and wanting to move forward and out of debt is your first step to a better life. There are excellent credit counselling agencies whose job is to guide Canadians out of debt.