Payday loans or instant cash loans are a very common type of loan in Canada. Canadians who are not eligible for a traditional loan use these types of loans to get instant cash. In Canada, payday loans are the most convenient way to counter any kind of financial burden.
Payday or instant cash loans do not require any collateral, and since they are unsecured, it attracts a high rate of interest. The loan ideally needs to be repaid within 2-4 weeks or when the borrower receives the next wages.
Eligibility Criteria to apply for payday loans
- To apply for such loans, you must be more than 18 years old and should be a Canadian citizen.
- You need to have a steady income for the last 3 months
- You need to have a Canadian Bank account which has been in operation for the last 3 months where the loan amount will be deposited.
- You should have a valid address proof, email address, and a valid phone number.
However, there is an exception for Canadian citizens if you’re unemployed. Lenders understand the fact that no one is immune to not having enough money, so they are ready to help you to come out of the deadlock. For example, if you apply for a $1000 quick loan, then you can easily get it if you’re an 18-year-old Canadian resident having a bank account. Your income can be from unemployment benefits or disability benefits, and you’ll still be eligible for the Pay Day Loan amount. At times, you can still get loans if you do not have a good credit score.
How to improve your credit score
- The first most important thing to maintain a good credit score is to pay your bills on time. By setting up automatic payments, such mistakes can be avoided.
- Leave old debts on your credit report
- Increase your credit limit
- Keep monitoring the credit score from time to time; request a copy of your credit score and correct errors in your credit report.
- Use your credit more since the credit is built on your ability to use credit and pay it back responsibly, which shows that you can manage your finances.
Advantages of Payday loans
- The lenders understand that borrowers need such types of loans to fulfill emergency needs, so the turnaround time is very less. Within an hour, the borrower gets feedback on loan approval. The amount is transferred to your account within a short period of time. The lenders, to remain competitive in the market, always push themselves to provide quick services.
- As discussed earlier, the entire process is quick and convenient. There is no need to book an appointment as everything can be done online. The advantage of a Payday loan over a credit card is that you get the credit in cash. By using a credit card, you can only purchase goods and pay for services, but with payday loans, you can pay any kind of bill or even do some repair work at home.
- There are several websites offering payday loans, so it’s easy to compare before applying for such loans.
- There are certain lenders who are ready to give loans even if your credit score is not good. However, in such cases, the lenders limit the loan amount, but if you pay the first loan amount on time, then your lender can increase the amount. Paying your loan on time not only protects your credit rating but also enables you to qualify for higher amounts in the future.
Disadvantages of immediate cash loan
- As mentioned earlier, since the payday or instant cash loans are unsecured, it attracts a very high rate of interest. But as of 2017, the majority of the lenders have reduced the rate to $18 per $100 over two weeks.
- Before applying for certain loans, you need to go through the terms and conditions very carefully, as in most cases, it’s not transparent. Your agreement might involve hidden costs and extra fees.
Things to consider before applying for a payday or instant cash loans
Before borrowing money, you need to understand the reason for borrowing the money. You must be aware of the type of loan application that you’re signing, and you must get familiar with all the terms. The majority of the provinces in Canada have some form of payday loan legislation. However, there are a few provinces like New Brunswick, Quebec, Newfoundland, and Labrador that have no specific laws. So, if you live in one of these, you need to be very cautious.