payday loans canada

Whether a person is one of millions of people who have recently experienced financial set backs or one is just in a temporary pinch and in need of money, payday loans are a wise and quick solution. There is no credit check and all that is needed is an active bank account, proof of being over the age of 18, and be currently employed or self employed. There is no need to further worry when one can take advantage of the ease of online payday loans.

Accepting online payday loans come with a degree of responsibility as well. Just because such loans are easy to acquire, these loans must be repaid on top of the fees associated. If one is considering taking advantage of the financial help a short term loan offers, one must take the time to educate oneself on the legal rights and responsibilities involved.

The process of applying for online payday loans is quick and easy. Usually, people who have poor or average credit can be approved as long as they agree to pay the loan back plus fees in a certain time frame. Read on to be fully informed on all the ins and outs of the process and the responsibilities of borrowing such loans.

THE BASICS OF A PAYDAY LOAN
The first time a person borrows money from a payday loan center, the loan amount is usually low in order to keep the lender’s risk low. Keep in mind, a high credit score is not necessary to be approved for a loan but a higher credit score could increase the amount of the approved loan.

First time users of payday loans Canada can expect to receive up to $250 with most short term lenders. The

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amount differs from company to company. The loan amount is based on the information provided about current pay rate and credit history.

An applicant will have to provide their employment information through pay stubs or a letter from their employer’s human resources department. In most cases, an employer will not be contacted on an initial application. An applicant will provide their information online and if approved, can expect to see the borrowed money appear in their bank account in one to three days. The borrower will repay the money plus fees within the agreed time period and by doing so, can take out another loan with the same company if needed.

WHEN TO USE A PAYDAY LOAN
Any financial emergency is a good reason to turn to payday loans. Doctor bill, car repairs, child’s school supplies or any financial burden that arises is a fine reason to take out a loan. One’s approval will not be based upon the reason for the need of the loan. Responsible borrowing is always advised so be sure to borrow only the amount of money truly needed.

WHEN NOT TO USE PAYDAY LOANS
Any type of short term loan should be considered as a temporary solution to a financial emergency. This money should never be considered occasional extra income. This money should also never be considered as a way to live above one’s means. It is never appropriate to take out such loans for frivolous spending and as an ongoing band-aide for ongoing financial needs.

The loan comes with a price tag that should not be ignored. Though a person is encouraged to borrow and repay on time in order to strengthen credit scores, a person is never encouraged to indulge in these loans carelessly or on a regular basis.

WHO USES PAYDAY LOANS?
Anyone who is over 18 years or older, is currently employed and has an active bank account is eligible for payday loans Canada. Mothers, fathers, single adults, senior citizens and professionals all find themselves in a financially tight position once in a while and use online payday loans.

When applying for a loan with any legitimate payday loan company, complete confidentiality is guaranteed when borrowing. Applications and payments can be done all online in the privacy of one’s own home. The websites for all trusted lenders are protected by firewalls that keep individual’s information private and secure.

There is no reason to be embarrassed of one’s financial situation. In fact, the more frequent one borrows and repays the loan on time, the higher the loan limit will be increased. Frequent borrowers can potentially take out a loan for $1,500. or more if they use the same short term lending company each time.

HOW IT WORKS
The online application process takes just a few minutes to complete. An applicant can be expected to provide the following:

• employer information
• birth date
• name
• social insurance information
• email address
• bank account number and routing number
• address
• create an account with username and password
• telephone number
• rent/mortgage monthly payment
• bank statements for people who are self employed
• in some cases, a copy of one’s driver license is requested

All of this information is secured and never sold or given out to solicitors.

After one has filled out the application, the online payday loans amount can be deposited in the applicant’s bank account the same day.

The interest fees are based on the amount borrowed. The fees are a fixed amount that is charged to every borrower and is not negotiable. The higher the amount borrowed, the higher one will pay in fees. Fees are also based on the time it takes one to repay the principal + fees. There is a time limit and once the borrower exceeds the time allotted, fees will increase.

WHY MUST AN ACCOUNT BE SET UP ONLINE?
When a person applies for a short term loan with a respectable lending house, the applicant will be required to set up a personal account that is accessed by the input of a user name and password. There are several reasons for this.

First, a person’s privacy is very important to the lender. The only way the lender can guarantee their customer’s privacy is by creating a private file that is accessed only by the lender and the borrower. Second, if a person successfully repays the loan on time along with all fees, that person is eligible to increase their loan limit in the future. In that regards, a private online file is needed to track the customer’s positive payment history and ensure they will be rewarded with future loans.

WHEN WILL THE FUNDS BE DEPOSITED?
In most situations, applications that are received before 1pm eastern standard time, the funds can be deposited in your account that same day. If applications come in later than 1pm, the funds will be posted to your account the next business day.

If an application is submitted on Saturday or Sunday, the money will be posted to the account on the following Monday or Tuesday. Payday loans in Canada are mostly conducted on eastern time zone so be mindful if the process is taking longer than expected.

HOW IS THE LOAN REPAID?
Your bank account will be debited on the agreed due date of the payday loan. There is no need to log onto the website to make payments or to send checks, money orders, etc. You will receive a reminder email from our automated system three days before your account is debited.

CAN THE FEES BE REDUCED?
The good news is YES! The fees can be reduced significantly if the online payday loan is repaid earlier than the due date.

CAN A LOAN BE CANCELLED IF NECESSARY?
Yes. You will have two business days to decide you do not need a payday loan. You can cancel by contacting our customer service agents by phone.

WHAT ARE THE REASONS A PERSON IS DENIED A LOAN?
More good news: a person’s credit score or lack thereof may not result in their application being rejected. However, if a credit report indicates that an applicant has defaulted on previous payday loans, the applicant will probably be rejected for future loans.

HOW IS A PERSON’S CREDIT SCORE OBTAINED?
Payday loans Canada run the credit report of all applicant’s through TransUnion. A person can visit the website for TransUnion and obtain a copy of their personal credit report.

DO’S AND DON’TS OF PAYDAY LOANS OF CANADA

Do use the payday loans for the following:
• emergency car repairs
• emergency medical bills
• extra groceries and food supplies when regular paycheck is occasionally not enough
• housing bills
• housing repairs
• emergency travel expenses

Don’t use payday loans for the following:
• gambling
• frivolous entertainment
• living beyond one’s own means

Remember that the money borrowed will cost extra money. Do not borrow any more money than is needed in an emergency. Repay the online payday loans on time or earlier than the due date.

CAN PAYDAY LOANS REBUILD A CREDIT SCORE?
Yes. Once a person begins their relationship with a lender, the credit reporting agencies are contacted and track the relationship, so to speak. If the applicant maintains a good relationship with the lender, the applicant’s high level of financial responsibility will be reflected as a steadily increasing credit score.

If a person wants to rebuild their credit history, taking out a payday loan is a good way to start. The more a person borrows and repays, the better a person’s credit history will look.

PAYDAY LOAN V. CREDIT CARDS

Using payday loans in Canada can be a relatively inexpensive way to rebuild a credit score as opposed to credit cards. Credit cards have much higher fees than online payday loans. Credit cards can charge anywhere from 8% to 25% interest rate on purchases and tend to be much easier to get into financial trouble with.

A person is much more likely to default of credit card payments instead of payday loan payments. The reasons for this are the following:

• Payday loans are much more convenient to repay since the loan is recovered by an automatic debit from the borrower’s bank account.
• Credit card companies will continue to allow a person to spend beyond their ability to repay, causing a person to unwittingly bury themselves in mounting debt.
• A person must take the time to send a check or make a phone call to a credit card company to repay the debt. This is time consuming and the task can be easily forgotten, resulting in very high late fees.

CAN I AVOID AUTOMATIC WITHDRAWALS FROM MY BANK?
Many people are concerned with giving their bank account access to a company that they are unfamiliar with. If this is the case, one should research the lending company well and check with the Payday Loan Association to be sure the lender in question is registered with this agency. If so, a person can rest assured that their bank information will be secured and their bank account will not be fraudulently

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accessed.

A borrower always has the option of paying early and thus avoiding the automatic withdrawal of their bank account. The other rewards for paying early are a reduction of fees in most cases. However, in all business conducted with a legitimate loan center, an applicant must submit their bank account number so that the lender can deposit the loan into the borrower’s account.

PAYDAY LOAN V. BANK LOAN
Taking a loan out from a bank is not as easy as it sounds. First of all, many people who have a low or struggling credit rating will certainly have to provide collateral on their loan. Collateral is defined as anything of value that the borrower owns that can be collected in case of loan default. In other words, a person must own something of significant value to be considered for most bank loans. Bank loans are also much more expensive than a payday loan, with interest rates that are based on one’s credit score.

PAYDAY LOANS V. TITLE LOANS
A title loan is, by definition, a loan made with the understanding that if the borrower defaults on the loan, the lender can confiscate either a car, motorcycle or any other agreed motor vehicle as repayment. The vehicle is usually auctioned off and the debt is repaid by the earnings of the auction.

This type of loan is not available to as many people as a payday loan. Many people are still making payments on their motor vehicles and so do not hold the title. A person must have sole ownership of the vehicle’s title to be approved for the title loan.

The other reason a title loan is not as safe as a payday loan is that if a person comes into hard financial times that last longer than the current financial difficulties, the person may default. If the person defaults on the title loan, they may lose their one mode of transportation to and from work: their car.

HOW MUCH ARE THE FEES?
Depending on the applicant’s residential location, the fees will vary from $21 on every $100 lent to a rate of 23% of the principle. Payday loans Canada are not available in all regions of Canada.

ARE ONLINE PAYDAY LOANS LEGITIMATE?
The only way to be sure that one’s personal information is being protected by a legitimate payday lender is to consult a licensed lender. Be sure the lender is registered with the Canadian Payday Loan Association and the regional consumer protection agency.

THE HISTORY OF SHORT TERM LOANS
The payday loan structure is also called a ‘short term loan.’ This type of loan has been around for a centuries, as long as people have used a monetary currency. The idea of lending a sizeable amount of money to a person for a small amount of time has always come at a high cost as well.

Before there were governmental agencies in place to regulate the lending industry, so-called ‘loan sharks’ have made fortunes on other people’s financial desperation. These loan sharks would lend individual’s money with interest rates sometimes higher than the original amount borrowed. Many people nowadays incorrectly compare payday loan institutions as such loan sharks.

However, the short term lending institutions of today are legally required to set a limit on interest rates and lending fees so that such financially desperate people are not taken advantage of. If a short term lender tries to fraudulently charge their customers hidden fees and/or threatens to increase current fees for undisclosed reasons, a customer has the legal right to file a lawsuit against the fraud lender.

WHAT HAPPENS IF A BORROWER DEFAULTS?
If a person takes out an online payday loan and does not have the funds available at the time of the lender withdrawing the money out of the borrower’s bank account, the borrower will be contacted by all means available and given the chance to pay in cash in person. If the person pays in cash in person, their account will be credited and no legal action taken. This person will usually face bank charges resulting from insufficient funds that they are responsible for repaying. A short term lender will not be responsible for bank fees.

payday loans in canada

If a person defaults on the loan in the above mentioned way and fails to repay the loan in cash, their account will be flagged and the credit bureau will be notified if the account remains unpaid for up to 90 days. After 90 days, that person’s debt will be usually turned over to a collections agency. The collection agency will purchase the debt from the lender and will attempt to recover the money owed by the defaulting person. Eventually, if a debt remains unpaid, that person’s credit report will reflect a loan that has been defaulted.

Another consequence of an unpaid debt is that a borrower’s employer will be contacted. Many employers today take an active interest in their employee’s credit history and borrowing habits. Some employers even choose to not hire a person with poor borrowing/repayment habits. An applicant must provide the employer’s information at the time of the application for online payday loans so this information will be available to the lender. This can be both embarrassing and troublesome in a person’s employment situation.

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