Canadian payday loans are a controversial topic and while they are now regulated in Ontario they still continue to be the reason that many consumers run into severe financial problems.
Canadian payday loans are a type of credit product that is very easy to get. Whether you have good credit or bad credit, if you are employed with a paystub you can get a payday loan. Canadian payday loan companies will not pull your credit report and the loan is granted based on your income. Payday loans are short term loans that have to be repaid in full from the first paycheque that the client receives after receiving the payday loan.
Here is how Canadian payday loans work:
1. The Canadian payday loan company will give you a loan based on your income. Some Canadian payday loan companies will lend you up to 100% of your income on a given pay period. For example, if you earn $1000 bi-weekly you can borrow up to $1000.
2. The payday loan company will charge you to borrow the money until your next paycheque – the charge is usually large and a $1000 payday loan for 2 weeks could bear a charge of $100-$250.
3. On your next paycheque (still following the $1000 example) you would owe $1100-$1250 even though your paycheque is only $1000.
Many, many people find that when a payday loan comes due the loan cannot be paid in full, resulting in a default, rolling over the payday loan, or taking out another payday loan.
If you default on Canadian payday loans, the situation can get very embarrassing very fast. The Canadian payday loan company will not hesitate to call your employer, may fax notice to your employer, may send you to collections, or worse, sue you.
If you roll over a $1000 payday loan that costs you $150 bi-weekly to borrow, at the end of 6 months you will have paid $1300 in fees on a $1000 loan, which is more than the amount of the original loan.
If you take out multiple payday loans you could end up owing more in fees on payday loans than you earn.
This is a dangerous cycle, and if you are drowning in Canadian payday loans you have to break the cycle. You can get rid of Canadian payday loans but the method you use to do so will greatly depend on your personal financial situation, how many you have, whether or not you are in default and more.
Speaking to a consultant who knows how to deal with payday loans is a sound way to get both good advice and put plan together. Once you deal with your Canadian payday loans the key is to never take them out again!
For more information about Canadian payday loans or if you need help to get rid of Canadian payday loans please visit www.debtcare.ca or call 416-907-2582.