Did you know that over two million Canadians use payday loans each year? That number only continues to grow, especially because now these types of loans are more accessible than ever.
And while the popularity is growing, many people are unaware of how these loans work and why they're needed in the first place. So, to help you better understand, iCash, a leading Canadian lender, is here to share some simple facts about quick loans and why they can be useful.
Before we get into the 10 interesting facts about payday loans in Canada, let's take a look at why they are needed in the first place.
Why Get a Payday Loan?
This type of loan may be the answer if you need to borrow money quickly and don't have access to another means of borrowing. Also referred to as an unsecured loan, you can take out a payday advance without having to worry about putting up your assets as collateral.
Many people turn to these loans to address a tight cash flow situation, such as a medical emergency, unexpected car repairs, or simply when needing to pay for a spontaneous weekend getaway. The amount that you can borrow varies depending on the lender and the province you're located in. The typical loan amount ranges from $100 - $1500 and the repayment period is short - usually less than 3 months.
Common Facts About Payday Loans
Before borrowing money, it's important to educate yourself with the right information to ensure you're choosing the best option for you. Let's jump into some key details about payday loans in Canada:
You Can Get a Payday Loan With Bad Credit
Payday loans are designed to help those in need, even if your credit score is low. Your poor credit does not automatically disqualify you from being able to obtain a payday loan. Instead, the lender will use other factors, such as your income and employment history to assess your loan application.
Factors like these can help determine if you need the money for short term financial relief and your ability to pay the loan back in time. So if you have poor credit history and are considering obtaining a loan online, you can rest assured that you have multiple options available to you.
Differences Between Payday Loans, Check Loans & Payroll Advance Loans
You may have heard other terms like a check loan or a payroll advance and wondered what the difference between these are. The truth is, there is no difference between payday loans, check loans, and payroll advances. The use of the term is according to the lender’s preference, and they are used interchangeably.
A payday loan can be called a payday advance or check loan by different lenders. And, even online lenders may use any name they prefer i.e. instant online loan ore-transfer payday loan.
24-Hour Payday Loans Can Be a Great Quick Cash Flow Fix
Payday loans are an excellent alternative for temporary cash flow problems or financial emergencies. Taking out this type of loan is quick and easy, especially nowadays when they can be obtained completely online and without having to fill out any paperwork.
Faxless & Simple Application Process
The application process only takes about five minutes online and most online lenders offer support 24 hours a day, 7 days a week. When it comes to getting your money, you can do so within minutes of signing a loan agreement. Plus, online lenders like iCash offer flexible repayment terms that will suit your individual needs. It's simple and convenient.
Payday Cash Loans are Deposited Electronically
When you take out a payday loan online, the money is deposited directly into your bank account. The most common way funds are deposited is through a quick and simple e-transfer.
Once the funds are in your account, you can use them however you please. The great thing about this type of deposit is that there's no need to wait for a check to arrive in the mail.
No Limitations on How to Use Payday Loan Funds
Most online lending companies do not impose any limitations on how to use the cash advance. This means that the money can be used for any purpose you see fit, whether it's for an emergency, car repairs, groceries, or other bills. This is a major perk compared to other types of loans that may have more specific uses, such as a home equity loan which can only be used for housing-related expenses.
Payday Loans Interest Rates in Canada
In Canada, payday loans and the interest rates that are charged on them are regulated by provincial governments. There are significant restrictions that are imposed in some of the provinces, while other provinces have relatively few restrictions.
Listed below is the interest rate breakdown for iCash payday loans in Canada:
British Columbia: $15 per $100 borrowed
Alberta: $15 per $100 borrowed
Manitoba: $17 per $100 borrowed
Ontario: $15 per $100 borrowed
Nova Scotia: $19 per $100 borrowed
New Brunswick: $15 per $100 borrowed
Prince Edward Island: $15 per $100 borrowed
Paying Off Your Payday Loan
Much like how interest rates for payday loans vary per province, so too does the period a borrower has to repay his or her loan. For example, if you obtain a payday loan in Alberta, you would be entitled to 2 to 7 repayments based on your pay frequency at no extra cost or fees, ranging from 42 to 62 days.
If you apply and obtain a payday loan as a resident of Ontario, you would have only one repayment option. The only reason you can be offered an extended repayment plan is if you are applying for a third consecutive loan within 63 days.
What Happens If I Can't Pay Off a Loan on Time?
If you can't pay back a payday loan on time, you may incur additional fees or interest. This is not always the case, as some payday lenders' terms & conditions differ from others. The bottom line, it's best to read the fine print before getting a loan and potentially furthering yourself into paying off additional debt.
One way to avoid additional fees is to get in touch with your lender as soon as possible if you know you won't be able to make a repayment on time. Most lenders are willing to work something out with borrowers who communicate with them early on.
You Can Cancel Your Payday Loan or Back Out Early
Most online payday loan companies have an early cancellation policy in place, which means you are free to cancel your loan beforehand if you choose to do so. With iCash, borrowers are given two business days to cancel or back out of a payday loan early. No questions will be asked and the borrower will not be held responsible for any costs associated with canceling the loan during the two-day grace period.
Cheaper Alternatives to Payday Loans
There are other types of loans that you can apply for and be approved for, such as short term secured loans, unsecured personal loans, etc. These loans may be cheaper in the long run, but the difficulty to get them varies and depends on the following factors:
Your current income
Your debt-to-income ratio
The amount of money you require
Your credit rating
These types of loans that are secured by banks or other financial institutions may be more readily available, but they tend to have stricter eligibility criteria and you may be required to have collateral.
An online payday from iCash, on the other hand, does not require any collateral and is much easier to get approved for. This type of loan is ideal for those who have a less-than-perfect credit rating or for those who need money urgently.
A Payday Loan May Be Right for You
It's important to understand how online loans work and why they can be a beneficial solution for some people. An instant loan should not be considered a long-term solution, but rather helpful for anyone who needs a fast, easy and confidential way of getting cash fast.
The above information about payday loans in Canada may assist you in making a more educated choice regarding whether or not they are the best option for you. If you have any further questions, contact an iCash customer support representative or check out our large portfolio of 5-star success stories before proceeding with your application.