4 Undeniable Reasons to Avoid Quick Cash Loan Companies in CanadaFebruary 12, 2020
Online payday loans in Canada can look enticing when you need money fast, but they come with a huge amount of risk. Find out why online payday loans are a terrible idea and what alternatives to use instead.
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The problem with online payday loans in Canada
Getting an online payday loan in Canada is like swimming in shark-infested waters: dangerous and something that should be avoided at all costs. Payday lenders are described as predatory because they use shady tactics to take advantage of vulnerable Canadians. It’s how one man’s $1400 payday loan snowballed to more than $10,000.
Need quick cash without the risks that come with payday loans? Apply for your personal installment loan today, get the cash by tomorrow, and start building towards a brighter financial future!
Despite the bad press, the number of payday loan operators have actually increased as more people look for options outside of traditional banks. It may be tempting to do business with these types of lenders when you’re in a tight spot financially, especially when some online lenders offer the reassuring convenience of “no credit check and instant approval”. But the truth is, payday lenders can put you in serious financial peril. Here are four reasons why you should stay away from online payday loans in Canada.
1. Online payday loans have crazy high-interest rates
Thanks to sky-high interest rates, it’s easy for your finances to spiral out of control when using online payday loans. Let’s say you get a two-week $500 loan and it costs $15 for every $100 you borrow. That works out to a repayment amount of $575 and a whooping annual percentage rate (APR) of 391%. And it’s even higher in some provinces.
2. Online payday loans have short repayment periods
Most payday lenders require you to pay back the loan within two to four weeks. Making this short timeframe can be difficult, especially if you’re living paycheque to paycheque. If you don’t meet the payment deadline, you’ll be hit with more fees and forced to roll the loan over. Many people end up taking out another payday loan just to cover the first one which leads to a cycle of debt.
3. Online payday loans don’t build credit
You might be able to get an online payday loan with no credit check, but you’ll pay dearly in fees and interest rates to offset the lender’s risk. Furthermore, online payday loans in Canada don’t help you build credit because lenders do not report your positive payment history to credit bureaus. Luckily, there are other solutions (i.e. installment loans) that offer fantastic credit-building opportunities.
4. Better alternatives exist
Many Canadians with poor credit choose online payday loans with no credit check because they believe they have no other options – this is simply not true. There are many alternatives out there that are more flexible and cheaper than online payday loans. Here are just a few examples:
- Credit card cash advance: Withdrawing money from your credit card isn’t ideal, but it still beats getting an online payday loan. Annual interest rates on cash advances can reach up to 24.99%, a fraction of what online payday lenders charge. There are also fees typically ranging between 2% to 5% of the cash advance amount. Some credit card providers charge a flat fee instead (usually around $5 per cash advance). Keep in mind credit card cash advances have no grace period so interest charges begin accumulating the minute you take cash out of the ATM.
- An overdraft line of credit: Talk to your bank and see if you can get approved for an overdraft line of credit. This kind of loan is linked to your chequing account and offers peace of mind by preventing cheques from bouncing and covering debit transactions when you don’t have enough money in your account. An overdraft line of credit is usually more affordable than overdraft protection programs which can cost up to $35 per transaction. You’ll still have to pay interest on the money you borrow and there may be small fees associated with this service.
- Speak with creditors: If you’re pressured to take out an online payday loan to pay back other loans, consider negotiating with your creditors first. Explain your situation and see if they can extend payment due dates or set up a different repayment schedule that works better for you. Some lenders may let you pay in instalments without any fees or additional interest charges.
- Personal loan: A personal loan from a reputable lender is an excellent option if you have bad credit but need cash fast. Also known as an installment loan, this type of loan gives you a lump sum of money and can be spent however you like. Extended repayment periods allow you to make equal payments over a set term, while reasonable two-digit interest rates prevent you from getting trapped in a cycle of debt. Unlike online payday loans, personal loans can improve your credit score when used responsibly.
Get a personal loan online from Spring Financial
There’s no need to turn to predatory payday lenders when there are credible online lenders like Spring Financial. From medical bills to emergency car repairs, Spring Financial has helped Canadians across the country with their financial needs by providing personal loans of up to $35,000.
Discover the Spring Financial difference:
- Personal loans for everyone: Get approved even if you have bad credit, no credit, or have filed for bankruptcy.
- Cash in a snap: Money can be e-transferred straight to your bank account on the same day or within 24 hours of applying.
- Flexible repayment plans: Terms can last between nine to 60 months so you can pick a shorter term to pay your loan off faster or a longer one to make lower monthly payments.
- Reasonable interest rates: Because astronomical three-digit APRs are just not right.
- Credit-building opportunities: Boost your credit score by making loan payments on time.
- Trusted online lender: See what Canadians are saying about Spring Financial on Trustpilot.
- No hidden fees: Say goodbye to application fees, maintenance charges, and other hidden costs.
- Ultimate convenience: Applications can be done from home so you never have to step foot in a bank or payday loan shop.
Save yourself the headache of online payday loans by choosing a convenient personal loan from Spring Financial. Get approved today by applying online or over the phone at 1-888-556-6441.