A payday loan is a short loan with high costs, which makes borrowing money expensive. You can take out a loan of up to $ 1,500. The loan must be repaid with your next paycheck.
You have up to 62 days to reimburse it in the following regions:
- British Columbia
- New Brunswick
If you do not pay it back on time, you will be charged additional penalties and fees. Your debt will increase accordingly.
Payday loans are designed to help you get by until your next paycheck or for a limited time. Use them only for one-time expenses like rent, groceries, or utility payments. You may run into financial difficulties if you use them this way.
You can take out a payday loan from Red pay day or private business owners.
Expectations when you take out a payday loan
If you’re thinking about getting a payday loan, here’s what to expect.
What do you need to provide a payday lender?
In most cases, payday lenders will ask for the following documents:
- a stable source of income
- a bank account
- a permanent address
Payday lenders will ask you to do one of the following before giving you a payday loan:
- Complete a document authorizing the lender to deduct the total amount owed, including fees, from your checking account when payment is due (also called pre-authorized debit).
- Issue a post-dated check for the full loan amount, plus fees.
When giving a payday lender your bank details, keep in mind that they will control the assets in your account.
Getting money from a payday lender
The payday lender will usually put funds into your bank account or offer you cash.
In other situations, however, the payday lender may ask you to take out the loan on a prepaid debit card. You may need to pay a fee to unlock and use the card.
Repay a personal loan
Some payday lenders require you to pay off your loan at the same place you received it. In many jurisdictions, a payday lender is prohibited from extending or renewing a payday loan.
Make sure you understand the Agreement
The payday lender will ask you to sign a contract outlining the terms of the loan, including interest, fees, and payment schedule. Before signing this form, please read it carefully. Anything you don’t understand, ask the payday lender.
Contact the consumer rights office in your state or territory to learn more about the regulation of payday loans in your jurisdiction.
Online Payday Loans
Payday lenders can be found in physical locations or on the Internet (http://www.redpayday.com/apply-now.html). Online payday lenders should be avoided, as many of them are not licensed and do not meet provincial standards that protect borrowers. Only work with licensed online payday lenders.
Check that a payday lender is licensed with your provincial or territorial consumer protection agency.
Watch out for payday lenders based outside of Canada. If you have any issues with them, they can be difficult to resolve.
Also beware of websites that claim to offer payday loans. Some will collect your information and pass it on to a legitimate payday lender.
How Much Do Payday Loans Cost?
Payday loans are more expensive than other forms of credit. This is because you are paying significant costs. The expense could be equal to an interest rate of 500-600%. If your pre-authorized check or debit is not cleared; you may be charged a fee. These high fees can make it harder to repay the loan, adding to your financial hardship and stress.
Before taking out a payday loan, make sure you can pay it off on time. If you don’t, your financial situation could be worse. Your debt may continue to increase, and you could end up paying a significant amount over time.
The following assumptions are used to calculate the costs:
- A payday loan charges $ 17 for every $ 100 borrowed, which equates to an annual interest rate of 442%.
- A line of credit carries an administration fee of $ 5 and an annual interest rate of 8% on the amount borrowed.
- Savings account overdraft protection incurs a cost of $ 5 plus 21% annual interest on the amount borrowed.
- A cash advance on a credit or debit card incurs a fee of $ 5 plus 21% annual interest on the amount borrowed. consists of a fee of $ 5 plus annual interest of 23% on the amount borrowed.
What if you can’t pay off a payday loan on time?
If you don’t pay off your loan on time, you could face serious repercussions.
These penalties may include the following, depending on the laws in your area:
- If you don’t have enough money in the bank, the payday loan company may charge you a fee.
- If you don’t have enough money in the bank, your finance company may charge you a fee.
- The overall amount you owe, including fees, will increase in the future.
- To get the money back, the payday lender can contact your friends, family, or work.
- The payday lender may have to deal with a debt collector, which may show up on your credit history.
- You could be sued by the payday lender or the debt collector for the debt.
- A payday lender or debt collector could foreclose on your property.
- The payday lender can take legal action to seize the funds from your pay stubs (also known as a pay cut).
It’s easy to fall into the debt trap if you can’t make your payday loan payments on time.
What to ask a payday lender?
When applying for a payday loan for the first time, educate yourself about the overall cost of debt. Find out all you can about fees, penalties, and interest, as well as the loan repayment schedule and if there is a maximum amount you can be fined for on a payday loan. Learn about the fees that may be charged if you are unable to pay off your loan on time.