When a person comes up financially short for whatever reason, one solution that can help them temporarily get out of that rough spot is payday loans. As the name suggests, a payday loan is a short-term loan that expects you to pay back what you owe to the lender on your next payday.
Ideally, this means that a part of your next paycheck must already be allotted onto paying back your loan, or else you’ll suffer the consequences of high interest rates.
While this sounds like a scary thought, you don’t have to let payday loans get the best of you. It’s still a quick solution to your current monetary problems. You simply need to have a game plan so you can free yourself from the burden of debts before it fully traps you.
Payday Loan Application: Things to Keep in Mind
Payday loan companies are businesses that operate on the notion that borrowers are in desperate need of cash. Hence, they will bank on this desperation to charge fees and high interests.
Fortunately, the government has already begun regulating these fees to minimize financial burdens on the part of borrowers. However, it’s worth noting that payday loans should still be among your last resorts to solve your financial woes.
If, after weighing your choices, you’ve decided that applying for payday loans in Canada is your best option right now, here are some things that you should remember to ensure that it will not cause more trouble than what it’s worth:
1. You Must Pay on Schedule
Payday loan lenders may be able to give you money as you need it, but they charge very high interest rates if you don’t pay on time.
If you’re always unable to pay your dues, you’re just putting yourself into an endless debt cycle. By the time you’re done paying, you’ll see that you actually ended up paying more than double the amount you owed in the first place.
Hence, to avoid any more financial problems, make sure that you’ll be able to pay back your payday loans on schedule. If you can’t, at least make an effort to clear them out in the soonest possible time.
2. You Must Review the Lender’s Conditions
While lenders grant a payday loan even to those who have bad credit, make sure that you’ve read all of their conditions before proceeding with your application. Here are some things to take note of:
The repayment’s due date
The total fees that you must pay to get the loan
The total amount needed to loan at least $500
The total amount you need to pay if you can’t pay on time
Your different options for paying back
Documents for your proof of income or bank account
Being aware of these things can help quicken the transaction process. It will also help you better prepare on your payback plans, especially if you can’t finish the payment all at once. Your lender must issue a written agreement that states the loan’s total costs and its due date.
3. You Must Know the Lender’s Limitations
One of the main reasons why many people get deeper into debt is because they get into deals that are actually scams. Since they desperately need the money, they completely fail to do a background check on the lender that they’re doing transactions with.
To ensure that you’re only dealing with legitimate companies, here’s a short list of what lenders aren’t supposed to do:
They can’t charge you beyond $15 for every $100 worth of loans.
They can’t loan you beyond 50% of your monthly paycheck.
They can’t ask you for any collaterals.
They can’t ask you to name a guarantor.
They can’t approve another loan unless you’re done paying your first loan.
If a lender breaks any of these rules, don’t transact with them at all costs. Also, make sure that they’re accredited by the government so you know their operation is legal.
4. You Must Not Get Too Reliant on Payday Loans
Although payday loans can provide you with instant cash, the real, long-term solution for your financial issues is to start working on your financial independence. This ensures that you never even have to consider having to apply for payday loans.
Conclusion: Get Your Payday Loan Only from a Reputable Company
Payday loans can be a financial trap because of their high interest fees. However, if that’s the only option you have right now, make sure that you only borrow from a reputable company that is licensed by the government. Doing transactions with legitimate lenders saves you from further financial woes.