Payday loans are short term loans that have become quite popular in Canada recently. Even though these are short term loans, the interest rate on them is very high. Payday loans are usually taken out by people who are in desperate need of money. The loan has to be paid back in 4 – 5 days, or on your next payday. If you are not able to return the loan on the given date, the interest will keep rising. There are a lot of private companies that are offering different kind of payday loans in Canada. The max amount you can borrow with this loan is $1500. However, the amount can vary from lender to lender. If you are thinking of getting a payday loan you might want to consider Friendly Lender’s payday loans London Ontario.
What to Anticipate While Taking Out a Payday Loan in Ontario
If you are looking to get a payday loan, the first thing you need to do is provide the lender with the required information. This includes; your bank account, address, and proof of income. Also, to make sure that you pay back the loan amount, the lender will require you to fill out and sign a form for a pre-authorized debit. Which means that the lender will automatically receive the loan amount from your bank account on the due date. They can also ask you to right check instead of preauthorized debit, which can be cashed out when the loan is due. Some companies may require you to return the loan on the exact location from where you received it.
The money will be directly transferred into your account by your lender when the loan is approved, or you will be given a prepaid loan card to use the cash. You will also be signing an agreement with the lender that will have all the details of the loan including, the amount, the fee and the interest. Make sure that you read this agreement correctly and discuss with your lender if you have any objections.
Are These Loans Risky?
Even though payday loans have high interests, they are not as risky as they appear. If you understand the risks involved in the process and are confident of paying it back, it should not be a problem for you. People have also failed to return the loan in the past. Around 20% of payday loans go into default, and that can look bad on one’s credit history. So, make sure while taking out the loan you are not just considering the borrowing amount, but you are also considering the hefty fee that you will have to pay with it. For example, if the loan amount you have taken out is $300, then you may have to pay an amount of $80 as interest. So, you should be planning to return $380 instead of $300.
Who Qualifies for a Payday Loan
Payday loans are one of the most accessible loans to get in Canada. The requirements for getting a payday loan are not strict at all. You will be required to go through a credit check, but there is nothing to be worried about because you can get the loan on bad credit as well. Then you will need to provide some identification, which in most cases will be your ID card or driver license. This rule makes sure that no one is getting a loan with a fake id. Remember, payday loans are last resort. If you have some little credit available that you can use or are eligible for some other loan you might want to consider that option first. A payday loan is for people who are in a financial pickle and have bad credit history.
Whether you qualify for the loan or not, also depends on which state you are living in. All Canadian states do provide payday loans, but they have different rules. In Ontario, the max fee a lender can charge for a $100 on a 14 days loan is $15. The lender is also required to give 48 hours to the borrower, in case the borrower decides to cancel the loan. And there are no rollovers, extensions or direct bank transfers.
What Happens When You Fail to Pay a Loan
It is strongly advised that you must plan appropriately before taking out a payday loan to avoid adverse outcomes. If you fail to pay your loans within the given period, you will have to deal with severe consequences. A fee will be charged automatically by the lender if you do not have sufficient funds in your account. And to top that your bank will also be charging you a certain amount if it comes to that. The interest on the borrowed amount will keep rising until the debt is paid. The lender also has the right to contact any of your relatives or friends in efforts to collect the loan amount from you. Your loan could also be sold to a collector company by the lender, and that will go on your credit report. In extreme circumstances the lender or the collection company can sue you as well and are on liberty to seize any property you have. They also have a right to garnish your wages, which mean a certain amount will be deducted from your pay-cheques regularly.
If you fail to make a payment on time, you can get into serious debt. However, it is not very tough to pay back your payday loans. As long as you are cautious, you should not hesitate on taking out a payday loan.