Payday loans are short term loans made by companies like Money Mart and The Cash Store at very high interest rates. A borrower writes a personal cheque for the loan amount, plus a fee, payable to the lender. The lender holds the cheque until the borrower’s next payday and then deposits it if the borrower hasn’t paid by cash before that date. If there are insufficient funds in the borrower’s account, they will owe a return fee to the payday lender and an NSF fee to their bank. The borrower might then take out another payday loan to pay off the original loan.
The fees for payday loans are as much as $17.50 for every $100 borrowed. This works out to an APR (annual percentage rate) of 913% for a one week loan or 456% for a two week loan.
What makes me most concerned about these companies is that as the recession continues and banks restrict their lending, the payday loan companies I mentioned above both had double digit revenue increases this past quarter over the previous year. These revenues are made from the increasing number of people that believe they have no other options for paying their bills and rent.
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Tom Drake is the owner and head writer of Canadian Finance Blog.
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One minor money emergency can quickly snowball into a financial nightmare. If your resources are limited by a temporary cash crunch, get swift help with a payday loan service.
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peterscott
Personally, I don’t opt to avail of loans nowadays. I try (and try so hard) to spend what I am capable of spending. However, if the situation calls for it, then I would.
Thanks for discussing this topic Payday Loan, really it was very difficult for me to write article on this topic but after reading your article I collect more information about payday loan . Now I have sufficient information related with this payday topic. Thanks a lot to the publisher of this site for this great article for payday loan.
Should I consolidate my dept?
If need a short term loan service payday loan is the best for you. However, you need to also know that payday loan has it’s high interest rate so you need to be ready about it if ever you passed the due payment date. But overall payday loans are a good choice.