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Easy Online Cash or Payday Loans Don’t Exist
Here’s Why

by Kevin Sun

There’s no such thing as an easy online cash loan or payday loan in Canada. There are plenty of fast e-transfer payday loans out there and companies that offer them 24/7, but they are never easy. This is true whether it’s called a cash loan or a payday loan. When you have to pay back a loan quickly at an extremely high interest rate, what might have seemed like a painless quick fix can instantly turn into a big debt problem. 

Why Online Payday Cash Loans Are Anything But Easy

If you’re thinking about applying for a personal cash loan online or at a store near you, then you’re probably in a situation where you need money fast and are looking for the quickest and easiest way to get it. When your savings are exhausted, your credit cards are maxed out, and you can’t depend on support from family or friends, it can seem like the only option is to borrow from a payday loan company. These lenders often try to sell you on the idea of 100% guaranteed approval with no credit check and cash delivered through speedy direct deposits or e-transfers. Getting a loan from them can indeed be easy, but the problem is what happens after.

Thinking About Getting a Payday Loan

It’s no surprise that whether you apply for them in person or over the internet, payday loans come with high interest rates. However, it might surprise you just how high they are. Let’s say, for example, that you get instantly approved virtually for a payday loan at 15% interest on the principal amount (i.e. the money borrowed). So if you borrowed $1000, then your total payback is $1150. 15% interest might feel like a low number, but that’s only because it’s for a 2-week period. If you calculate that as a yearly interest rate, which is how credit cards do it, then that 15% balloons into 390%. How many times higher is this than your credit card’s interest rate? That 15% interest rate is just an example of what many national payday loan lenders charge. Actual rates are determined by provincial legislation in most provinces.

What Happens When You Can’t Repay a Payday Loan?

While a payday loan is expensive, it won’t do too much damage if you repay it on time without getting into more debt. The problem is that many Canadians who get them run into problems paying them off. After all, an online cash loan won’t solve underlying financial difficulties like not having enough income. In fact, payday loans make those difficulties worse because now you have to pay the loan interest on top of everything else.

Canadians who can’t repay their payday loan can end up renewing it or getting another loan to cover it, adding onto the interest. The new loan could be even bigger if they also need to cover their expenses for the next 2-week period. If they still can’t repay it later, then they might get into even more debt just to survive. Many provinces require payday lenders to stop roll-overs and change loans into installment loans to provide more structure for repayment. But as the debt keeps growing, it will inevitably reach a point where the loaning stops, and the collection calls take over.  

What to Do If You Need a Cash or Payday Loan Right Now

Even if you know what the cost of borrowing from a payday lender really is and that easy payday loans don’t exist, that doesn’t solve anything if you still need a cash loan right now. If this is your situation, or if you’ve already borrowed the money and are not sure how to pay off your payday loan, speak with one of our non-profit credit counsellors. An experienced counsellor can help you find options to deal with your current problems without jeopardizing your financial future. Give us a call at 1-888-527-8999, email us, or chat with us on our website to get started.

 

Worried about debt?
Get help to overcome it.
The sooner you start dealing with your debt, the sooner you’ll have it paid off. If you need some help getting started with a plan, or if you’re not sure if your budget is realistic, contact a non-profit credit counsellor for free, confidential help. Typically, the earlier you contact us, the more options you’ll have.

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