More Money, More Problems? The Danger with Payday Loans

It is becoming far more common these days to hear advertisements on the radio, or see gigantic signs when driving down the street, for relief from financial woes in the form of payday loans. These “convenient”, and we use that term very loosely, almost immediate loans claim to offer that extra money to get you through until the next payday – some even use the excuse to treat yourself as a reason to obtain one. So, does more money really equal more problems?

Are you thinking of getting a payday loan to tide you over for a bit – or even to treat yourself? Wait – these seemingly innocent fast-cash solutions come with their own host of problems, and if you are not aware of the risk you can easily get in over your head – and rather quickly!

First, payday loans are not free – obviously. When a company offers you fast cash, $100 for $20 for example, you might think that this $20 is worth the extra cash in hand at this moment. So you head into the business, provide your paystub and walk out with your loan. The fact that no credit report is required should be a major red flag!! This is definitely one of those times when “sounds too good to be true” really does ring true.

What if that $100 though just doesn’t seem to cut it and instead you are thinking $1000 would be that much better? Now you are talking about a $200 cost – that is a 20% fee to borrow money for sometimes as short a period as two weeks. And borrower beware – 20% here is just an example, as some places will charge far more!

Worse than the fees is the jam you find yourself in when, at the end of the month, you are yet again strapped for cash and can’t pay that payday loan in full. Think about it; if you didn’t have the cash at the beginning of the month, what makes you think you’ll have it at the end? Can’t pay it back in full? Now you are looking at another $200 in interest plus a fee for the extension.

When broken down, it is clear that payday loans are a prime example of fool’s gold – money that never actually belongs to you and just ends up costing you dearly in the end.  Know the dangers before you head into that establishment and perhaps consider some other avenue.

For more about the dangers of payday loans, or for help dealing with a revolving payday loan you can’t seem to shake, please call DebtCare Canada today at 1-888-890-0888. 

The Truth About Canadian Payday Loans

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.

Payday Loans Cash Advances Do NOT Build Your Credit

The majority of people who turn to expensive payday loans do so because they have credit problems and no one else will give them a chance. The problem is that payday loan cash advances do not build your credit. In fact they do not report to your credit report at all.

p>The only information that directly affects your credit report is loans, credit cards, lines of credit, store cards, collection items and judgments. If you are turning to payday loans because you have taken out other credit and made late payments or defaulted, you have to first deal with your bad credit/debt before you can begin to rebuild.

Payday loans are not the answer and actually will make your financial situation worse due to their expense.

There are many ways to deal with debt:

- Debt consolidation
- Credit counseling
- Credit settlements and proposals
- Bankruptcy

Some of these options seem more daunting than others but each is tailored for a different type of person in a different type of situation – each should be looked at with equal consideration if you want to make informed and effective financial decisions.

Approaching these companies directly will only result in a “sales” pitch, each will try to convince you that their choice is the best. So how do you make informed decisions? Invest some time and do some research. Use search engines like Google to learn about your options.

Consider hiring an unbiased Financial Consultant who can answer your questions and help guide you in the right direction based on your personal financial goals. This will save you a lot of time, money and sales pitches.

In the event that you are going to consult a Financial Consultant, be prepared. Plan your budget and gather all of your credit card and debt statements so that you can have a well-informed discussion. Beware of counselors who charge up-front fees. A good financial consultant will not charge you anything to consult you about your finances.

If an unplanned expense was what led you to a payday loan, review your budget and consider how you can set aside savings so that you have a safety net if you run into problems in the future. If you are buried in debt and there is no room in your budget to save, then you have no choice. Deal with your debt immediately so you can achieve financial health now and going forward. For more information visit http://www.debtcare.ca/

Online Payday Loans are Convenient but can also be Dangerous

Payday loans are credit products that have emerged only in recent years. Payday loans are short-term loans (usually $1,000 or less) that must be repaid by your next pay period. The costs of these loans can be exorbitant. Depending on the payday loan company, a $1,000 loan could cost as much as $250 to borrow for only two weeks!

Due to the escalating costs of such loans, payday loan companies have become a regulated industry. Some insiders have stated that perhaps these companies should not even exist. Payday loans have become even more readily available and an approved individual can obtain an online payday loan through a variety of payday loan companies.

As you see, payday loans can be the beginning of a vicious cycle. Case in point, here is an example of how quickly a seemingly small payday loan debt can turn on you, sending you into a financial tailspin.

1. A woman who earns $1,500 net bi-weekly finds herself embroiled in an unexpected financial issue and in need of some short-term cash, at which point she turns to a payday loan provider.

2. The payday loan lender grants her a two week loan for $1,000 and charges her a $250 fee to borrow the money.

3. Upon receiving her next paycheque, she is required to repay the payday loan lender $1,250. Taking into consideration that her paycheque is only $1,500, after paying back the payday loan lender she will only be left with $250.

4. With rent to pay and children to feed, it quickly dawned on her that going to a payday lender was a bad idea. With few options available, she decided to go back to the payday loan company to extend the loan another 2 weeks at a cost of $250.

5. This put some money back in her pocket, but it still leaves her short. She decides to take out a second small payday loan in the amount of $500 to make ends meet. This loan will cost $100 to borrow the money and is due on her next pay period.

6. By her next pay period she now has two payday loans to repay – one for $1,250 and the other for $600, bringing the total debt to $1850. Her paycheque was for only $1,500, thereby leaving her $350 short. Even if she rolled these loans over, she is still short and can’t even cover their fees. Thus leading her to take out a third payday loan.

We see individuals who are less than $10,000 in debt but because it is payday loan debt they are considering bankruptcy.

If you are in this situation, you should not disregard it. It is serious and must be dealt with immediately. There is good news; there are programs that have been made available by the Federal Government to help people that have fallen into these payday loan traps. These programs often do not involve bankruptcy and can put an end to the destructive payday loan cycle.

Avoid online payday loans all together and contact DebtCare at 1 (888) 890-0888 or visit us online at http://www.debtcare.ca/