Best Alternatives to Payday Loans

Alternatives to Payday Loans: They Do Exist

Today, Canadians have more access to goods and services than ever before. Thanks to better-than-average incomes (when compared to other countries) and easy access to initial credit, it’s not hard to see how falling into debt can come to pass and this is why you need to know about alternatives to payday loans.

Once that debt creeps in, consumers are sometimes caught off guard and don’t know what direction to take to remedy the situation. After a few missed payments that lead to a bad credit rating, some consumers are led to believe that payday loans are their only option. Same day payday loans are not the only option for Canadians.

In this article, we’re going to present you with a number of viable alternatives to loan lenders so you can avoid doing business with one of the most predatory industries out there today.

Before we start, however, we need to give you a bit of inside information as to why payday loans are such an awful way to go when you need quick access to some extra cash.

First, let’s begin with the fact that the system is rigged. Payday loan issuers don’t want to lend you money and only make the 20-22% interest they advertise on their gawdy roadside signs. There’s not enough profit for their tastes in that, so what they are really aiming for is make sure they get you in the penalty box.

How do they get you in the penalty box?

While payday loans are generally a lot smaller than what you can get with other private lenders, payday loans are calculated to take a very large chunk of your next pay cheque.

What’s wrong with that?

Well, since you have to pay back both the principal PLUS interest two weeks after you borrowed it, you’re at serious risk of defaulting on repaying the full amount.

Example: Let’s say you make $850 every two weeks. You take out a payday loan for $400. The interest comes out to $88. Suddenly, your next pay cheque leaves you with only $362 over the next two weeks. Can you really manage that? Can you realistically adjust your living expenses to go from having a budget of $425 a week against $181?

Most people can’t and that’s why so many default on their loans and the payday industry is so profitable.

So now that you see why you must avoid them, let’s explore the alternatives to payday loans.

Alternatives to Payday Loans: Ask your employer for a small advance to be deducted from your pay

You might not have thought this possible, but more employers are ready and willing to help with this than you think. They have every incentive to help you too. They already know you, they know exactly how much you get paid, they also have your banking information in the event that you default (which you likely wouldn’t do any way).