Instant Payday Loan In Canada

What is a Payday Loan?

A payday loan, also known as Cash Advance or Salary Advance, is a type of short-term loan where the merchant will extend a high-interest, unsecured loan solely based on your income. The process involves the borrower writing a post-dated cheque with the merchant as the beneficiary or its electronic equivalent to give the lender admittance to your account.

A typical payday or cash advance loan is a small-dollar loan not exceeding $1500 with a very short-term repayment period due in a single lump payment. In places like Alberta, Manitoba, British Columbia, New Brunswick, and Ontario, payday loan settlement can take up to sixty-two days.

Exorbitant fees and high-interest rates often characterize payday loans. However, their accessibility and low requirements bar make them Canadians favorite when borrowing for emergencies.

Essential Requirements Needed to access a Payday Loan

Payday loan requirements may differ from province to province and company to company, with some more lenient than the others. However, these are some essential criteria you are required to fulfill to qualify for a payday loan.

• You must have a job. Some lenders will demand you to have a job for at least three successive months. Having a job will guarantee a regular income source to support the repayment plan.
• You must have an active bank account. Most lenders also demand you provide evidence that you have an active bank account for at least three months. This evidence will prove that you’ve received income for the last three months, further verifying your employment and income stability.
• It would be best if you had a verifiable means of Identification(ID). A verifiable ID, like a Driver’s License, will serve as proof of your name, age, permanent address, etc.

Some lenders can go further and ask for proof of non-bankruptcy, short-term debt ratio, etc. Furthermore, before approving your loan application, lenders will demand you to do any of the following:

• Fill and sign an agreement form that will give them access to the funds in your bank account.
• Submit a post-dated cheque carrying the loan amount + interest + other fees.

Benefits of Instant Payday Loans

Speedy Processing

Speed can be said to be the most significant edge payday loan has over the traditional loan. Although the timeframe for processing and approval varies from company to company, on average, it takes 24 hours or less to get a payday loan approval.

Low Requirements

Unlike traditional personal loans with a laundry list of stringent conditions, payday loan requirements are very lenient and straightforward. In provinces like Ontario, merchants only need an active bank account, proof of income, and a driver’s license. Other regions may demand more details.

Freedom to Use Your Money as You Pleases

If you get (say) an auto loan from a traditional lending institute, you can only utilize that loan to finance your auto deal. On the contrary, payday loans allow you the freedom to use your money as it pleases you. It doesn’t come with any limitations.

Legal Protection

Various statutes in Canada govern payday loans. Legislations and institutions are put in place to protect both parties. The borrower’s biodata and bank details are also confidential and protected by law.

Automated Processes

The entire process is automated, from application to approval up to repayment. Once your application is approved, the merchants will automatically credit your account. Likewise, the loan amount + interest + fees would be credited into the lender’s account on the agreed repayment day.

Fast Credit Card Check

Most payday loans merchants do not care about their credit history. Therefore, they exclude it from their list of requirements. But that is not the case with traditional loan lenders. Bad credit history is not a determinant factor when it comes to payday loan decisions.

Advantages and Disadvantages of Payday Loans

Advantages

• Payday loans have fewer requirements than traditional loans.
• The most significant advantage of this type of loan over others is that they’re easily accessible. Most lenders optimize their processing time to 15 mins or less to fill and a turnaround approval time of around 24hours. Some of these lenders operate 24 hours a day, seven days a week.
• Payday loans do not require a good credit score to be approved. They don’t need a credit history.
• Unlike mortgage or auto/car loans, payday loans do not require collateral. 

Disadvantages

• In comparison to traditional loans, payday loans are considered expensive. Its annual interest is about 442%. That is, for each $100 you take, you will pay an additional $17 as interest. Other charges include $5 each for the administrative and overdraft fee. Plus another $5 if you’re using a credit card.
• Some economists and financial advisers see payday loans as unfair, unaffordable, predatory, and can trap the borrower into an endless cycle of debt.
• As a requirement, lenders demand to access your account. This requirement may prove detrimental in the future.
• Building good credit history or worthiness is essential. However, payday loans do not help you make this.

Conclusion

Payday loans are an excellent option whenever there’s an urgent need, especially to settle emergencies.

However, ensure you check these boxes before deciding to take a payday loan;

• Ensure you read and thoroughly understand the terms and conditions before signing.
• Ensure you can pay back as at when due. Failing to deliver on the agreed date has consequences. Lenders have the option of reporting to the relevant authorities, taking legal action, making phone calls to their friends, relatives, or employers, etc.
• Payday loans are for emergencies and unbudgeted expenses. Avoid taking this loan to settle recurrent fees or luxury lifestyle. 
• Read about the rules governing loans in your province.
• Ensure that the company is certified to work in Canada. This way, the authorities can come in for settlement in case of any dispute.
• Ask questions and seek clarifications on what is not clear to you.
• After filling out the forms, ensure you get a signed copy of the papers.

With the current legislation, predatory loans are becoming history. Hence, it is good to be prudent in choosing merchants with a proven record of providing legitimate and customer-centric services with fair rates and affordable fees.