It seems as though payday loans are becoming alarmingly more prevalent for many individuals looking for a quick financial fix. But borrower beware: if you are considering a payday loan to help with some upcoming bills, or to make a big-budget purchase, you might want to think again.
There has been a great deal in the news lately, and for good reason, regarding the actual borrowing consequences for payday loans. Sure, $100 for $20, as their advertisements typically claim, may sound like an okay deal, but in the long term, these loans are far too often much more costly than they initially appear to be. Payday lenders are actually quite infamous for their sky-high interest rates, thus their propensity for sending borrowers into a self-destructive cycle of debt that can be incredibly hard to get out of.
Here is an example of why: It is the end of the month, and payday is not for another week, but you find yourself strapped for cash with a few bills still outstanding and no way to cover them. Looking for some fast cash, you head to a payday loan centre and leave with $1000 in about 15 minutes, after agreeing to terms of $20/$100 (so about $200 to cover the entire loan). Time goes by, and everything seems good at the end of the month, but then you realize you are on the hook for that cash. If you were strapped last month, the chances are quite high that things will be the same again this month. That means re-borrowing the money, and again paying that $200, and again being on the hook at the end of the month.See the problem? The cycle is one that far too many people find themselves stuck in repeatedly, and without additional funds, can’t get out of. If you have been considering just how attractive these easy-to-get loans seem to be, you might also want to seriously consider, firstly, why they are so easy to get, and secondly, what the long term impacts are if you are not 100% certain you’ll be able to pay them back in a short period of time.
So what are your options if you are already stuck in the revolving payday loan of your nightmares? Well, you have a few options. If a payday loan is just one of your financial worries, and is more like the proverbial cherry on top of your rotten debt sundae, you might think about the benefits of a consumer proposal or bankruptcy. And, since a payday loan is a form of unsecured debt, it is often included in a bankruptcy or consumer proposal.For more about how bad payday loans actually are, or for other debt help, DebtCare Canada is here to help you. Contact us today by calling 1-888-890-0888.