Many people who are struggling to pay their bills look to payday loans for help. However, this is almost certainly not the best option available. While payday loans are quick and easy, this convenience often comes at a big cost. Interest rates on payday loans are typically significantly higher than rates on other types of loans. For example, in Ontario, the law allows for payday lenders to charge up to $21 for a $100 loan for two weeks. This is 21% interest for two weeks. Over a full year, that’s 546%! There aren’t many other loans out there that charge a 546% annual interest rate! However, because payday loans are very convenient, many people still choose them. They don’t think about the annual interest rate, just the rate that it will costs for two weeks. They believe that they’ll be able to pay the money back quickly and thus they won’t end up spending a great deal on interest. However, the truth is that, if you’re in a situation where you need a payday loan, you likely won’t have the money to pay it off in two weeks. This means you’ll pay a lot of interest in a very short period of time. The reason many people choose payday loans is because these lenders typically don’t check your credit rating before giving out the loan. Most payday lenders only want to see that you are of legal age and that you have a job. This makes these loans tempting to people who need a few hundred dollars to pay a sudden expense like a car repair bill. Since many Canadians do not have any savings, people often turn to services such as payday loans to pay emergency expenses. The issue is that, once you end up getting one payday loan, it’s easy to accumulate large amounts of debt very quickly and wind up in serious financial trouble. This can even lead to bankruptcy. If you’re heading down this path and looking for payday loan help, here are a few suggestions.
Options for Payday Loan Help
One way to avoid getting into payday loan trouble and accumulating a lot of debt is to understand the true cost of payday loans. Before getting any sort of loan, figure out how you will be able to pay the loan back. Be realistic. Then figure out how much interest the loan will cost you. You will want to come up with a budget that allows you to pay the payday loan back as quickly as possible while still meeting the rest of your financial commitments. This could involve cutting expenses and making sacrifices to pay back the loan. If you cannot come up with a realistic plan that allows you to pay the loan back, avoid it. Try other options instead of a payday loan. However, if you’ve already taken a loan and are now looking for payday loan help to get out of a serious debt situation, here are a few tips.
- Cut expenses. As mentioned, you may need to make sacrifices in order to fix your financial situation. This includes cutting expenses such as entertainment costs, food costs, cable bills, cell phone bills and other variable expenses.
- Look for other types of loans. While accumulating large amounts of debt is not a good idea, you may want to look to a personal loan or a line of credit instead of a payday loan. These options often have significantly lower interest rates. However, much like with a payday loan situation, you’ll need to ensure that you have a plan for paying back the loan.
- Seek professional help. If you have a large amount of debt and you can’t seem to pay it down, it’s often a good idea to consult a financial professional. These people can provide you with payday loan help and debt relief options. For example, a trustee in bankruptcy can give you a free consultation and review your financial situation. He or she can then provide you with options that can help you out. These options may include submitting a consumer proposal or filing for bankruptcy.
If you’re looking for payday loan help, you don’t have to do so alone. A licensed insolvency trustee is registered by the government and licensed to review personal financial situations and provide options that can lead to debt relief. Speaking with one can help you get your financial life back on track.