Have you ever experienced a financial crisis where you didn’t have enough money in your budget for an unexpected expense? In desperate situations, you may need quick access to cash! One option is a payday loan. While the quick and easy process may seem like a painless solution, it could make you worse if you’re not careful.
What Is A Payday Loan?
A payday loan is a short-term, high-interest loan that you borrow from a lender at the tome of financial crisis. The borrower is expected to repay the amount plus interest by the end of the two weeks. These loans are provincially regulated and are generally used for short-term financial crises. Contact us for affordable Payday loans online.
How Do Payday Loans Work?
So how do payday loans work? Contrary to their name, this is not a payday loan. You can usually borrow up to 50% of your expected take-home pay, and although terms vary, you must repay the amount borrowed plus interest within a two-week pay cycle. Repayment is often expected as a full lump sum payment.
How Do Interest Rates Work?
An important part of answering this question, “How do payday loans work?” is understanding how interest rates work. The biggest difference between a payday loan and a loan from a traditional financial institution is that the interest rates are excessively higher for a payday loan.
The tricky part is that some people don’t qualify for loans from conventional sources, so payday lending is one of the only options. If you’ve read and understood the terms and conditions carefully, this could still be a viable option in a desperate situation.
What Happens If You Miss a Payment?
How do payday loans online work if you miss a payment? Missing payments can have serious consequences and can quickly spiral out of control and into debt. The results depend on the laws in your province, but these are some of the potential results of a missed payment:
• The lender may charge you a fee if you don’t have enough money in your bank account
• Your financial institution may also charge you a non-sufficient fund (NSF) fee if there are insufficient funds in your account
• The total amount you owe, including fees and other interest, will continue to increase
• The creditor might try to contact your friends, relatives, or employers to collect money
• The creditor could send the case to a collection agency, which would negatively affect your credit report
• A creditor or collection agency could sue you for the debt and even seize your property
• The creditor could go to court and garnish your wages
Debt is a vicious cycle and it can be incredibly hopeless – but the good news is that it doesn’t have to be. Seek advice from reputable professionals who can offer confidential, non-judgmental advice to help you find the best solution for your financial needs. You may also consider an accredited credit counselor, licensed insolvency practitioner, or insolvency attorney.