Payday Loans in Canada: The Complete Guide

Where Do I Find Payday Loan Places Near Me?

If you need emergency funding, you can get a cash advance before your next paycheque and handle an unexpected cost without worry. You can find online payday loans that can be funded the same day or the next business day on the Internet and at a payday loan location. Payday loan stores and payday loan companies offer payday cash loans at brick-and-mortar locations in each of the provinces.

If you wish to take out instant payday loans, it is usually best to find short term loans online and obtain them electronically. Just think of a payday loan as a part of your next paycheque. It’s an advance that you get to take care of an emergency expense.

Payday Loans vs. Other Loan Products

The main difference between fast loans, such as payday loans, and other loans, such as personal loans for debt consolidation or big-ticket items, are the terms and interest. Same day payday loans carry a higher-than-normal interest rate as their payoff is faster. Personal loans that are not secured also carry high-interest rates. Nevertheless, the interest rate is lower because of the longer payment terms.

The interest rate you are charged for online payday loans is based on your income, your length of employment, and, in some cases, your credit history. Missed payments will increase the interest rate on any loan, including payday advances.

Options to Consider before Getting Payday Loans Over the Phone

Besides being conveniently available online, instant payday loans can also be secured over the phone. However, think about less expensive loan options before you make any moves. For example, do you have family or friends who may be able to lend you the money? Also, you might ask if a creditor could extend you more time for paying your bills. This way, you could use the money to pay for an emergency expense and still pay for the other bills without paying the higher interest rate.

Take out One of the Bad-credit Money Loans Online

This loan option is good for anyone whose credit score falls below 690. Some providers of same day loans tailor their products for people with bad credit. For example, you may be able to get a loan if you have a high debt-to-income ratio or your credit score is from bad to fair. Because these lenders specialize in this type of lending, you have a better chance of getting an advance, given your current finances. 

Get a Side Hustle

You may also be able to put emergency cash aside by taking up a side hustle online or offline. You can do this by:

• Setting up a business on eBay
• Taking on freelance work online
• Becoming an online tutor
• Establishing an Etsy business
• Setting up a Shopify store
• Providing dog walking or dog sitting services
• Earning passive income from a high-interest investment account
• Finding seasonal work, such as retail work during Christmas or taking on a job shoveling snow or taking care of a lawn.

Establish a Lending Circle

You might also form a lending circle with friends or people you trust. A lending circle is designed to raise funds for one person in the group each month. For example, doing so can help you pay for a car repair when needed while raising your credit score at the same time. 

You should form this type of group with long-term goals in mind. Unlike online payday loans, a lending circle does not offer a quick fix for cash unless you have been involved in the process for some time. However, once the group is established, you can pay for an emergency without paying the high payday loans interest rate set by law.

Use a Paycheque Advance App

If you receive a predictable income and need to get an advance, you might consider using a paycheque advance app. After confirming your earnings and job, you can get an advance from $100 to $500 on your next paycheque. While the apps usually charge low or no fees, they may require a tip for the convenience of using the service. These apps need you to earn an income before you request money. 

Keep this in mind:

Payday loans or payday advance loan products are only temporary financial solutions. If you notice that you regularly have to pay to get money already earned, you need to review your budget. Be very wary of any financial services provider that promotes free ways to get money early. There is always a catch.

You can also use online budget tools to check your debt breakdown and review your upcoming payments. Get a clear idea of the money coming into your bank accounts and what you are paying.

Using ZayZoon

Related to the app idea of receiving emergency same-day loans is ZayZoon, established in Calgary in 2014. The pioneer and trailblazer in Earned Wage Access (EWA) offers an employer-sponsored solution for employees who need to withdraw earnings between regular pay cycles. 

While no interest is charged for the funding, each transaction charges a $5.00 fee which the borrower repays for any quick online loans after they receive. ZayZoon is available to millions of employees through businesses in Canada, the U.S., and Australia. However, not every employee has access to this feature or may feel a payday loan allows them more privacy.

Pawn Shop Loans

Pawnshop loans are also used to get payday advances instead of visiting payday loan companies, whether online or at a store that offers payday cash loan access. If you need to get a loan without a credit check and have an item acceptable to pawn, a pawnshop loan might work. Both you and the pawnshop will need to agree on when you will pay off the loan and what interest and fees you need to pay to get your item back.

This type of loan funding may not be much different than getting easy payday loans online from a cost standpoint. Check the pawnshop loan’s annual percentage rate (APR) to ensure you are not paying a loan that involves much more money than the cost of the item itself. You cannot depend on pawnshop loans as a long-term funding solution. 

Like any cash advance loans online, you should not get into the habit of taking out pawn loans regularly, as it can get quite expensive. If this happens, you need to rely on a different solution.

Payday Loan Lender Requirements

If you find out a payday loan is the best solution for you, you need to learn more by asking, “How do payday loans work?” 

In Canada, payday loans are not funding used against a future paycheque. Instead, they represent a third party’s high-interest, short-term payday advance loan products. The terms are designed to coordinate with a usual two-week pay cycle. The provinces regulate payday loan products. 

Usually, you can borrow up to half of your take-home pay from your next paycheque unless you have children; in that case, you can use the Child Tax Benefits. The total amount for payday advances then includes the principal plus interest – due in two weeks.

The interest rate calculations are based on an annualized percentage of the loan amount was borrowed for the year. That is why the interest is far higher than other credit products, such as lines of credit, credit cards, and bank loans. 

A payday loan lender can charge up to 400% or more for funding than if you took out a loan from a credit union or bank or took out an advance on your credit card. Usually, bank loans and credit union loans charge around 5% per year, while credit card rates run between 12% to 20%, on average.

However, you can sink further into credit card debt by taking out a credit card advance, and taking out a bank or credit union loan takes time – time that you may not be able to allocate. After all, an emergency cash situation is an emergency that cannot wait. That is why a payday loan is made specifically to get you out of financial hot water until your next payday.

Why Payday Loan Rates Are Much Higher

At this point, you may wonder why payday loans are exempt, legally, in Canada from excess APR charges. This is because the Criminal Code in the country prevents assessing APRs over 60%. However, amendments to the code exempt payday lenders from the regulations followed by other lenders.

To receive the exemption, payday lenders must feature payday loans that are $1,500 or less and short-term (2 months or less). This practice is meant to safeguard recipients of payday advances, specifying the limits set for the total cost of instant payday loan funding.

Due to the amendments of the Criminal Code, provinces can establish the maximum borrowing limit for payday loan direct lender services. Therefore, borrowers pay substantially different interest rates based on where they live. For example, in some provinces the rates can range from 391% (as of 2021 in five provinces) to as much as 548% per year (as of 2021 in Labrador and Newfoundland).

Working with Credible Payday Lenders

You have specific rights when it comes to working with direct payday lenders. Not only must lenders be licensed and registered in the province where they do business, but they must also abide by the following regulations.

• They cannot ask you for or accept payment only through automatic paycheque deductions.
• They must give you all the information you need to secure funding to pay back the loan, including the loan term, payments, and interest rate.

Reviewing the Pros and Cons of Payday Loans

Payday loans give you quick access to funds in as little as a day or two and don’t come with stringent requirements for funding. Payday loans with debit card accounts are available and payday loans without a credit check. Because payday loan companies can easily be accessed in Canada, you can ask, “What Payday loan places near me can I get funding?” You will usually get a quick answer by going online.

However, the higher interest rate is the main drawback of going to a payday loan store or contacting payday loan lenders online. The interest rate is naturally higher as the loans are designed for short-term purposes. Therefore, the annualized rate charged for the loans enables the lenders to reduce their risk and get the amount charged for the financing.

Conclusion

When a payday loan is used correctly, you can get the money you need for a cash emergency and pay back the loan by your next payday or in two installments. Don’t count on a payday loan online to fund a vacation or a non-emergency expense. Doing so can sink you deep into debt.