A payday loan is a short-term loan with high fees that make it a very expensive way to borrow money. If you can’t pay it back on time, you’ll face even more fees and interest charges. Just imagine, the true cost may be equivalent to an interest rate of 500-600%.
These high costs can make your loan harder to pay back, which can increase your financial difficulties and stress.
The two most basic reasons why people fall into the payday loan trap are bad credit and a lack of savings.
Let’s look at some of the borrowing choices available to you, and compare the costs (based on a $300 loan for 14 days):
💰Line of Credit: $5.92
💰Overdraft on bank account: $7.42
💰Cash Advance on a Credit Card: $7.65
💰Payday Loan minimum cost: $51
💰Payday Loan maximum cost: $75
Source: Financial Consumer Agency of Canada
People who take payday loans often get locked into an ongoing cycle. One payday loan creates the need for a second, which creates the need for a third, and so on.
⚠️Be careful when providing your banking information to a payday lender, as they will have access to funds in your account.
Before taking out a payday loan be very sure that you can pay it back on time and consider cheaper ways of borrowing money.
If you’re already having trouble making ends meet because you can’t make the payments on your debts, think carefully about the long-term consequences of taking out a payday loan.
Seek advice from reputable sources to explore the different financial options that are available to you. There are qualified professionals who can help you find the best solution for your financial needs. We offer FREE, confidential, and no-obligation consultation!
Best Regards,
🇨🇦Canadian Debt Advisors
