Why are Payday Loans Hard to Pay Back?

Why-are-payday-loans-hard-to-pay-back

Payday loans are short-term loans with come with the capacity to eliminate your financial stress caused by sudden expenses. These kinds of cash advances are quick solutions that don’t need formalities, unlike traditional financial institutions.

One of the attractive features which come with the loans is that you can apply with your bad credit or no credit. On the other hand, you must have experienced how it goes when applying for any financial services with a lower credit score.

There is always less possibility to get the approval or else you need to pay much when you don’t have good credit. This kind of short-term fund comes forward to assist you after helpless has left you alone to come out of the financial ditch.

Why people consider the loans tough whenever it comes to a loan repayment is due to high interest rates. Once you have left any payment to pay which keeps on turning into a big problem for paying next time.

It sometimes pushes you into debt too, once you have reached under debts then it seems to be a challenging task to pay off the loan. That’s why it is important to go with prior planning so that there can be no such issues ahead.

What are Payday Loans?

Payday loans can make you able to deal with your current unexpected financial situations when you have no extra money left. With the help of a pay-day cash advance, you can pay off your urgent medical bills, school fees, unexpected repair of your car and you can do emergency home renovation too.

Since these online loans contain high-interest rates so you need to pay the borrowed amount as soon as possible after using it. For that, you can set up a budget and hold your expenses until you repay the amount plus interest in full which is a great sign if you do that.

Why are payday loans bad?

There is only one reason which seems to be a little scary in form of high interest rates. People very often have to think about it before applying, but that is possible to deal with through prior preparation. The interest charges are considered higher than personal loans and credit cards.

Many payday lenders charge a fee per $100 which comes in approximation from $15 to $30.

Why Payday Loans An Endless Debt Cycle?

One of the reasons these loans are very costly, people are seen becoming victims of predatory lending. Because they are not able to afford their ongoing debt due to expensiveness which makes them apply for one more loan for the debt consolidation.

That’s why many lenders want to have access to the bank account of the borrowers to avoid facing any loss.

What if you can’t pay back the amount of the payday loan?

In case you are not able to make the payments of your payday loans on time. It would be far better to speak with your lender, manage to come up with a new payment-making plan. You can’t get one more loan until you repay the entire borrowed amount with interest in full.

There might be a possibility, your account might be sent to the collection agency then the role of your lender will not exist.

Reasons to Avoid Instant Payday Loans

Guaranteed payday loans no matter what credit score is very helpful for the Canadian, who has met with unexpected expenses and emergencies at the money shortage. By using loans, people can fix their financial problems. On the other hand, it is good to avoid applying for such types of loans.

There are a few reasons why you should keep a distance from instant decision payday loans. You can see and notice the reasons which force you not to apply at some point.

Some valid reasons to avoid payday loans!

  • Come With High-Interest Rates: You have to pay high-interest charges while paying off the loans after using.
  • Charge Costly Fees: Payday loans are for short-term financial help which makes you able to fix your problems on the spot. That’s why they have costly fees to pay later on in comparison to other types of loans.
  • Lead to a Debt Cycle: Not making payments on time, keeps on increasing interest rates which turn to be like a burden to pay later. This pushes you into debts due to the burden of unpaid loans. This is where the journey of debts begins with facing financial challenges ahead.
  • Unhealthy Financial Behaviour: Getting payday loans sometimes turns into unhealthy financial behaviour due to not being able to pay off the funds on time. It damages your financial reputation in the eyes of financial institutions to seek financial assistance further.
  • There are More Affordable Ways to Get Cash: You can try some other ways apart from payday loans which include borrowing from your friends and families, you can use your emergency funds. That’s not only! You can work harder on your income; you can sell the old stuff that has become useless to you.

What is Payday Loans Act, 2008?

You can get protection under certain acts of payday loans 2008. It is a very important part to know before you apply for the loans.

Here are some payday loan acts to know:

  • No one can charge you more than $15 per $100, you take out.
  • No other services can be used within the area of payday loans.
  • You get two business days to get your loan application cancelled with no penalty fee.
  • You can leave the first loan to pay with the second one which is also known as rollover. And you can’t apply for a payday loan from the same lender until you eliminate your last one.

Let’s have look at the rules of payday lenders:

  • Under the payday loan act, payday lenders have licenses from the government of Ontario.
  • They should mention some information on the first page. This can be like the applying amount, for how many days your loan is and what to pay to take out the money.
  • It is not allowed for accepting payment through automatic deduction from the paycheck, you receive.
  • Lenders can’t call you up more than 3 times a week even through your email.
  • They can’t tease your family members or friends at any time.
  • They can’t impose post-dated cheques or pre-authorized debit apart from once. Still, your financial institution charges any overdraft fee or fee for the remaining low balance. You have a right to recover the fee from your lender. You don’t need to pay the cost for taking out the loan.
  • They can’t intimidate you or use unofficial language.
  • You can’t be forced by them at all.

Some rules came into effect from July 1, 2018:

  • They can’t offer you financial assistance more than 50% of your overall income per loan.
  • They must show the charges of the loans over the advertisement or it can be on the agreement.
  • The cheque cashing services can charge a fee which is $2 plus 1% for the cheques issued by the government. And it can be the total face value of the cheque or else $10 whatever seems to be minimal.

How to Getting Out of the Payday Loan Cycle?

In case you had a habit of applying for payday loans to meet your needs during emergencies. Now you see yourself trapped in the heap of debts and you are willing to come out. You can get out of the debt cycle.

All you need to do is follow some tips which will keep on you helping you so that you can get rid of the debt cycle as soon as possible.

Kindly have a look at them:

  • Set first up a budget: Getting out of debts can only be possible when you have established a budget because you will have money to pay off your debts.
  • Approach your lender: After decide the specific amount that you can pay off every month then don’t delay in contacting your lender.
  • Learn from your mistakes: Once there is no debt pending, you should do something for saving so that emergencies can’t trouble further.
  • Look out for debt consolidation: Through this, you can target all your pending debts at once and eliminate them all by applying for one more debt consolidation loan.

What reasons do people take out payday loans?

There are so many reasons people apply for payday loans. The reasons depend on their current need which they want to fulfil. You can have a look at some common reasons why payday loans are popular.

Some basic purposes for Cash “$” with instant decision! 

  • Debt consolidation: To remove their pending debts.
  • Strewn bills: To pay off unpaid bills.
  • Medical expenses: To cover medical expenses.
  • Changing home appearance: To renovate existing homes.
  • Mental worries: To keep a distance from mental stress through instant money availability.
  • Loans On Social Assistance: If it’s your only source of income or Social Security beneficiaries. Then payday loans for welfare recipients in Canada.

Ask the Right Questions- What’s on your mind?

Before you get a payday loan in Canada, Getting the answer you want:

  • How much you will pay for the loan if it’s overdue?

    Interest charges keep on piling up as long as it goes unpaid which then starts creating problems.

  • How much will it cost me to borrow this money?

    While applying online, it won’t cost you anything except interest charges. But some predatory lenders are sitting who charge a fee too when proving these financial services.

  • How much will I be charged if I don’t pay the loan back on time?

    If you don’t pay the loan back on time then the payday lender can charge you a one-time fee ($20). This will be for disgracing checks. That’s not the end because they have the right to charge high-interest rates even more than the loan has.

  • Is this payday lender licensed and in good standing?

    Some may not because they want to run their business only, but online lenders. Apart from that, you can check by yourself once you approach them.

  • Am I being charged more than $15 for every $100 that I’m borrowing?

    No, under Payday Loans Act, 2008, you are not going to be charged anything more than that.

  • Can I cancel a payday loan agreement?

    Yes, it can be cancelled any time before 2 working days after you applied for them.

  • How to Rebuild Credit After Defaulting on a Payday Loan?

    By making payments on time, you can rebuild your credit. But this time make sure to avoid loan defaulting.

  • What is The Best Way to Get Payday Loan Help?

    One of the best ways to get payday loans is to visit PaydayLoansBunny® after having internet access rather than visiting traditional financial institutions.

Conclusion

There is no such option like payday loans when you are surrounded by a heap of expenses. But there is no money left to deal with them then payday loans are the only way to fix your financial problems. It can’t be hard for you to pay off the loans.

All you need to do is be alert from the time, you applied for payday loans to set up a budget and eliminate unnecessary expenses. Apart from that, you can try for a part-time job which can give you some more money.

Get online access to cash advance lenders when you need it most.

100% Canadian. Secure. Free.

Apply Now

Lisa Morris