The cost of living in Canada has risen in the past couple of years and many people are living paycheck to paycheck. This means they have little to no extra cash to fund emergencies. Whenever people find themselves in an emergency, they have to find money quickly to settle their needs and be given breathing room to repay when they next receive their paycheck. This leaves them with a few options. There are financial service providers that allow people to pay for items in small interest-free installments, but those providers generally do not offer their customers cash.
Your next option may be to take money out of your credit card but your emergency may cause you to max out your credit card and still leave you needing more money. In such situations, you may have to take out a payday loan. Payday loans are short-term emergency loans offered by financial institutions, usually without collateral, to people in need of urgent cash. The loans are usually for personal needs and the approval process is usually fast.
Regular loans in Canada often take time to be approved and would require the people in need to submit documents that support their need for the money, and their ability to repay the loan. On the other hand, payday loan approvals skip most of the administrative obstacles and are processed quickly. People who request them receive the money within minutes, but there is a catch.
Reputable lending institutions like My Canada Payday that offer payday loans request basic financial information from borrowers and disburse the loans quickly, but with relatively high interest rates. There are pros and cons to obtaining payday loans and Canadians should consider them and make an informed decision if they seek such loans.
Pros of Payday Loans
Payday loans are generally useful and people who seek them will gain the following advantages:
- Quick approvals
- Fast cash disbursement
- Fewer requirements compared to regular loans
- Loan applications can be fully completed online
- Easy to access
- Approvals can be granted to people with bad credit scores
Cons of Payday Loans
While there are numerous benefits to obtaining payday loans in Canada, they have the following downsides:
- Higher interest rates than regular loans
- Tendency to keep people in a debt trap
- Short repayment window
- It fosters poor financial habits
Tips When Taking Payday Loans
Payday loans can be a lifesaver for people in urgent need of money, however, they should be careful when seeking them, and only borrow money they are ready to pay back quickly. To stay financially responsible when obtaining payday loans, consider the following tips:
- Always repay loans when due to avoid letting debts compound due to interest and late fees
- Only take out payday loans when absolutely necessary
- Avoid relying on payday loans to sustain your lifestyle
- Limit your payday loan request to the amount you need
- Only take out a loan you can feasibly repay with your next salary.
Endnote
Payday loans have pros and cons but the pros often outweigh the cons. They give people access to emergency funds and ensure they can meet their pressing needs. However, borrowers should apply for payday loans with caution and treat them as a last resort so they stay financially responsible and not fall into a debt trap.
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