Basically, a payday loan is a type of short-term loan that consumers take out to cover urgent expenses for which they do not have enough money. These loans are usually for amounts not exceeding $1 000 and must generally be repaid when their next paycheck is received. Interest rates are high, and this solution should be regarded as a last resort.
This type of loan is called “cash advance loans” because payday lenders essentially advance you the money you would receive on your next paycheck. Getting approved for a payday loan is fairly straightforward and no collateral is usually required. You simply need to be the age of majority in your province, have a steady job, have a bank account, and have valid and up-to-date contact information. There are no credit checks or additional financial verifications.
While payday loans can be seen as a lifeline at a time when cash is needed in an emergency situation, the interest rates charged are generally exorbitant. With such high rates, it can be very difficult to repay the original loan amount plus the added interest. They charge high rates, often have other hidden fees, and do not require much financial background checking of borrowers. It’s important to perform in-depth research before deciding on a payday loan.
Without much verification, even borrowers who may not be financially capable of repaying these loans are often approved. Actually, many payday lenders promise guaranteed approval even for those who are unlikely to be able to repay them.