A Payday Loan is a short-term cash lending solution. You can borrow up to $1,500 to help with short-term financial difficulties before you receive your upcoming pay cheque. In most cases, the payday lender will deposit money in your bank account or give you cash.
How much will a Payday Loan cost?
Payday loans come with high fees and a much higher interest rate than on a regular loan. This makes payday loans a very expensive way to borrow money. These high loan fees can make your loan harder to pay back, which in turn can increase your financial stress.
In the example below, $300 is needed for immediate car repairs. You get a Payday Loan for $300, the loan fee is $63 ($21 per $100). If you are unable to pay the loan back in 14 days, then a further $40 loan fee is added. Now you owe $403.
Infographic courtesy of the Government of Canada site
(https://www.canada.ca/en/financial-consumer-agency/services/loans/payday-loans.html
How Do I Qualify for a Payday Loan?
To qualify for these loans, there are No Credit Checks. You just need to be employed, provide a paystub and have a permanent address. Before taking out a payday loan, be very sure that you can pay it back within two weeks. If not, your financial situation can get much worse very quickly.
If you want to research the specifics of your situation. The BC Government website has a Payday Loan Calculator. In the example below, the amount borrowed is $500 for 14 days. The loan fee is $15 per $100 borrowed so the fee for this example is $75. It will cost you $575 for your $500 loan as long as you pay it back within the 14-day period.
Payday Loan Calculator courtesy of the Government of BC site
(https://www2.gov.bc.ca/gov/content/family-social-supports/borrowing-money/choosing-a-loan/calculator)
Be very careful when considering a payday loan.
More information on Payday Loans:
- Where can I get help to pay off my payday loan?
- Should I re-borrow on my payday loan?
- Is a payday loan eligible for debt consolidation?
If you have are caught in a payday loan cycle, please contact us to discuss your situation with one of our Credit Counsellors. The consultation is free of charge.
If you have more questions about your debt, you can also check out our Questions page where we have answered many common questions about debt and your everyday life.