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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).
Hot tip: even if you don’t need money you might want to consider asking your employer for a loan. Why? Because it could save you money on taxes. That’s why!
Alternatives to Payday Loans: Borrow from your family or friends
It might not sound like the best idea, but once in a while, telling friends and family straight up that you’re not in the best financial shape and could use some help is the best way to go. Like your employer, they know you and are very unlikely to charge you interest.
One very valuable tip: nothing puts strain on a relationship like unpaid debts, so if you do choose this route, make sure you have a pre-guaranteed timeline by which to repay your friends or family.
Alternatives to Payday Loans: Ask your bank for an overdraft on your account
The problem with banks is that they love taking their sweet time when it comes to processing any requests for borrowed money. Never mind the fact that most people who ask for loans do so because they need it quickly. If you have a decent relationship with your bank, you might qualify for overdraft protection so it might be an avenue worth trying. If you are unable to borrow from a bank, Loan Away offers Bad Credit Loans
Alternatives to Payday Loans: Start an easy side hustle
Even if you don’t consider yourself entrepreneurial, one of the fastest and easiest ways to generate quick cash on the fly is to come up with an offer. This offer can be anything from detailing people’s cars to cooking pre-cooked meals. Usually, $20 worth of black and white photocopies is enough to get a few hundred dollars in.
These kinds of side hustles have been known to grow into full-time businesses, so who knows what could come from this option. Your local library is packed with books you can borrow that will give you insights on how to start a small, part-time business.
Alternatives to Payday Loans: Personal term loans
This is the halfway point between banks and payday loans, but only the good parts. Like banks, private lenders who issue personal term loans tend to offer larger amounts to borrowers. Similar to the payday loan industry, they process applications very quickly and are ready to consider borrowers with bad credit.
More like banks, however, the repayment terms are a lot longer and more accommodating of the borrower’s needs. LoanAway, for example, will offer up to 36 months for borrowers to repay their loans.
If any of the other options in this list don’t work for you, LoanAway’s agents would be more than happy to discuss your options with you. Contact us for a no-obligations consultation.
WHERE WE OPERATE
We are committed to provide best customer experience possible. Currently we offer personal term loans in Ontario, Alberta and Newfoundland, but do check back with us soon, as we are working on expanding our reach to other provinces and territories.