A payday loan is a short term loan intended for unforeseen finances which may come up in between pay cheques. This type of loan can sometimes be referred to as a cash advance. Payday loans are unique in that they have significantly higher interest rates than other loans but the amount lent is minimal. Approval times are also much faster and credit ratings do not play a role in qualification.
Most Canadian payday lenders give these short term loans to the borrower in the form of cash or direct deposit into an active bank account. In return they require a post dated cheque or authorization for electronic repayment. The borrower is charged for the amount lent plus interest. Repayment will either coincide with the borrower’s next pay day or a term not exceeding two weeks. Additional fees or penalties will be charged if the loan repayment is not made within the allotted period of time. The loan generally does not exceed $1000 and statistics from the Canadian payday loan industry indicate that most loans average around $280 with lending periods averaging on ten days. Payday loans are a great option for those who run into unforeseen financial circumstances and need some cash to avoid bouncing cheques, penalty charges for unpaid bills, or defaulting on credit card payments. They can also be handy for things like fixing a broken down vehicle, dealing with medical emergencies, or other unforeseen finances.
To qualify for a payday loan, you will need proper identification, have an active chequing account, and proof of income such as a pay stub. There are thousands of payday lenders throughout Canada with borrowers now having the convenience of applying for them online.
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