Online Payday Loans in Canada

What Are Payday Loans and How Do They Work?

Before applying to online payday loans, it is important to understand what they are. Payday loans are a variety of short-term borrowing agreements, that are available to provide extra cash to employed people between paychecks. When accepting these types of loans, there will be an agreement made regarding repayment, which usually begins on the date of the lendee’s next paycheck.

With all loans, there is an interest to be paid for any missed payments. Payday loans tend to have higher interest fees and rates because they are riskier for the lender. Often, the loan agreement is based on how much salary the lendee makes, which the lender then decides how much the interest will be to ensure repayment is possible. The higher the risk for the lender, the higher the interest for the borrower.

Fast payday loans are usually smaller amounts of money, ranging between $500 and $1500. The maximum amount is determined by the Canadian federal government, as noted on their website. The Canadian government also requires every lender of payday loans in Canada, online or in a retail establishments, to be registered with the Financial and Consumer Services Commission, so that they can ensure the businesses are secure and regulated.

The way that payday loans are designed, they are meant to be paid back fully in one installment, whether pre-authorized withdrawal from the borrower’s bank account or post-dated cheque. This can cause a cycle of having to continually borrow to repay the lender.

How Are Payday Loans Different from Cash Advances?

If you are trying to find the best solution for your need of immediate cash, aside from the payday loan, another short-term lender is available. Cash advances come in two different types; which are as following:

Type 1: These are nearly identical in design as payday loans, where the lender lends an amount of money that is determined by the borrower’s salary, and is meant to be paid back out of the next paycheck that the borrower receives.

Type 2: These are designed as a line of credit with the lending amount determined by the available credit that is available on the borrower’s credit cards. Cash advances such as these are given out by the credit card companies, and are regarded identically as any purchase using the credit card.

If the applicant has a credit card with certain benefits, and is in a reasonable financial state, the option of a credit card advance may be the best choice. It is important to remember when choosing between the two types of cash advances to consider your credit rating and what the agreement is with the bank. Depending on the credit card, you may find that their borrowing fees are more than regular cash advances like the first type. It is vital that those looking to borrow know the difference between the two types so that they can make an informed decision.

What Are the Canadian Rights for Borrowers of Payday Loans?

MOST provinces in Canada have created specific to protect borrowers of payday loans. The Ontario government has set the standard for other provinces by developing the Payday Loans Act, 2008, which includes the following rules:

• Lenders cannot charge more than $15 per $100 borrowed
• Lenders cannot offer or charge borrowers for goods and services that have any relation with the payday loan
• Borrowers have 2 business days to cancel their payday loan contract without any explanation and with zero penalty costs or fees
• Debt from payday loans cannot be “rolled over” into a secondary payday loan because a borrower cannot receive a second payday loan with the same lender if money is owed
• Borrowers are not required to get insurance for their payday loans
• Borrowers are not required to pay more than a pre-determined percentage (which varies between 30-50%, depending on province) of total net earnings

Likewise, protection rules exist for borrowers that have neglected repayment, regardless of their reason. Lenders are prohibited from taking any of the following measures to force repayment:

• Contacting any of the borrower’s family members, friends, co-workers, roommates, neighbours, etc. for any reason
• Contacting the borrower more than three times in a week, apart from through mail, or on any public holidays
• Being excessively aggressive, using threatening language, or applying pressure to force repayment from the borrower
• Process pre-authorized withdrawals or post-dated cheques more than once, causing the borrower any additional fees or charges from their financial institutions

What Are the Requirements for Lenders of Fast Payday Loans?

There are several regulations that lenders of paydays loans in Canada, online or in person, that must be followed in order to be legally functioning. The requirements are:

Licence and Registration: Lenders are required to get licenced and registered with the provincial government where they are operating their business. They must also adhere to all rules and regulations of the Payday Loans Act, 2008.

Transparency: Lenders are required to post detailed information relating to the payday loans. The first page of each agreement must indicate the loan amount, the timeframe of the loan, and what the interest percentage is.

Loan Repayment: Lenders are prohibited from demanding or receiving repayment in the form of automated withdrawals from paycheques.

Borrowing Standards: Lenders are prohibited from granting more than one payday loan to a borrower that has an existing loan with them.

Loan Penalties: Lenders must disclose detailed information publicly, so that potential borrowers are aware of the penalties and fees associated with payday loans and their repayment.

What Are the Pros and Cons of Canadian Payday Loans?

The Pros of Payday Loans

Whether you choose to apply to in-person payday loans in Canada or online, there will be high interest rates. While these fees are something to be wary of, there are advantages to choosing payday loans over other short-term cash advances, such as:

• Minimal qualifications to meet
• Practically instant approval and delivery of funds
• Online payday loans are easily accessible
• Does not require a credit card
• Gives borrowers financial relief

The Cons of Payday Loans

Although there are several pros to payday advances online or in-person, there are factors to be wary of before you agree to the loan. These disadvantages include:

High Costs: The cost of a payday loan is $17 for every $100 borrowed, which adds up to an interest rate of 442% annually, whereas a credit card cash advance costs a $5 user fee and an interest rate of 23% annually on the borrowed amount.

Cyclical Dependence: People tend to opt for payday loans when they are in dire need, but repayment is expensive and is taken from the borrower’s next paycheque, leaving them with significantly less money than usual for basic expenses. This can create a cycle where the borrower is just out of reach of fully paying back the loan, accumulating more fees with each passing day.

Exploitative Behavior: There are some lenders that are hoping to take advantage of borrowers who may not be aware of certain regulations. Predatory lenders can do this by finding loopholes in the lending agreement and by deceptive advertising. Before signing any contract, it is vital for interested loan candidates to verify that the business is registered and in good standing with the provincial government.

 

What Else Should Be Considered Before Applying for A Payday Loan?

There are some other points that should be considered before clicking ‘apply’ for online payday loans in Canada, which include understanding the following important factors:

Candidate’s Needs: It is vital that people consider their needs rationally before applying for the fast payday loan, and feel confident that the expensive nature of these loans are worth it. Where possible to negotiate loan repayment, borrower’s may find benefit in discussing their contract with the lender, to see if making a payment plan for unpaid debt are available.

Compare Options: There are other options available besides payday loans for those requiring short-term loans. Cash advances from credit card companies and lending institutions may be more beneficial for potential borrowers to look into, before a decision gets made.

Length of Agreement: Payday loans are short-term agreements, and can be a positive solution for an interested borrower if they require cash immediately and cannot wait until they receive their next paycheque. If someone needs money right away, and their next payday is weeks away, a payday loan might be more beneficial to them, instead of someone who will get paid in a few days.

Loan Amount: Depending on how much a borrower is approved for when applying for an online payday loan in Canada, may be a deciding factor. The more money that is lent, the higher the interest, making it a more costly loan.

Repayment Costs: Lenders are not lending money, simply to be kind, but because they are hoping to make money off of the borrower. They do this by charging very high interest rates, which affect the borrower especially hard when they are late on repayment. Missing payments will also cost the borrower additional penalty costs and fee charges, so it is important that borrowers read their agreement closely to be aware of these details.

 

Common Questions About Payday Loans in Canada

Is it possible to get payday loans in Canada online?

Yes, there are many options available for online payday loans in Canada. Payday advances online have become the easiest way to get approved for a loan. While online payday loans are accessible, there are brick and mortar stores where people can apply in-person. Both versions of these fast payday loans have the same costs and consequences, so it is important to weigh your options.

What are the minimum requirements to be eligible for payday loans?

To be eligible for in-person or online payday loans in Canada there are a few requirements. People who are interested must be a minimum of 18 years old, have a regular income, have a permanent phone number and address, and have a traditional bank account. If borrowers can prove these requirements, they can then be approved and receive funds directly to their bank account in a short matter of time. Although it may be quick and easy to get a payday loan, the elevated interest and fees can make them costly.

If I have a low credit score, can I still get approved for a payday loan?

Yes, it is possible to get approved for a payday loan even with bad credit. These types of loans are designed to be available for people who may not be eligible elsewhere. That is why it is important to be certain that there is no other option available because of the high costs associated with them.

Are there online payday loans that accept disability in Canada?

There are online payday loans in Canada that accept disability payments. These types of loans depend on the disability payments of the borrower to repay their debt. Since government benefits is considered a reliable source of income, as long as the borrower meets all the requirements, it is likely to get approved for an online payday loan that accepts disability in Canada.

How fast do I get the results of my payday loan in Canada, once I’ve applied?

Once a borrower has submitted their application for a payday advance, a decision is made by the lender. The lender will notify the borrower about their approval in as quickly as a few hours.

How long will I have to wait to receive my payday loan once I’ve been approved?

Once a borrower has been approved for a fast payday loan, receiving the money into your bank account usually happens within a few hours.

Comparing Options to Payday Advances

If you are still thinking “where can I get a payday loan?”, there may still be other loan options available for you. The below selection is a collection of top businesses that offer customers a variety of lending options that may be worth your consideration, as they may cost less, have less interest, or have better repayment options. After you have reviewed the below lenders and selected the best fit for you, click “Apply Now” to begin filling out the application.

Payday Loans By Location

Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland & Labrodor, Northwest Territories, Nova Scotia, Nunavut, Ontario, Prince Edward Island, Quebec, Saskatchewan, Yukon