There is always that need for some extra cash, whether for paying bills, taking care of emergencies or whatever else that requires urgent financial attention. When faced with such a situation most people will usually have two options. Its is either borrow some money from friends and relatives or find a company that lender quick loans. In such situations banks are usually not helpful since most of the loans they provide have a long repayment period.
The above state of affairs is what has led to an increase in the uptake of payday loans in the Canada. The country’s payday loan industry has been on the up and up over the years with. The period between 2020 to 2022 saw an increase of about 400% percent in the number of people going for these instant payday loans. The average amount of money borrowed in this period was about 300$.
Who can benefit from Payday loans?
Most of the people who go for payday loans are the low income earners with a yearly income of less than $25000. Most Candians going for payday loans do so to financial emergencies that arise before the monthly cheque comes in. With the growth of the internet an increasing number of consumers are choosing to take payday loans online. This is as opposed to approaching lenders physically. The online process is quite fast with lenders assuring consumers of same day loans.
The reason why most people prefer to go for these loans is because not much is required of them. These are not typical bank loans and pretty much all lenders will not bother checking a consumer’s credit history. This means that even with worst credit rating one can borrow the money they need. A payday loan in the Canada will cost anything between $20 and $30 for every $100 borrowed. The reason why the rates are so high is because lenders want to cushion themselves from defaulters. These numbers of defaulters are quite significant in number.
What does the Canadian Laws states?
Laws in the CANADA do not exactly limit the extent to which a loan can be rolled over. To add to that the interest rates are not controlled by the government meaning that lenders can charge as much as they want. Payday loan lenders are required be licensed by the Office of Fair Trading before going into operation. The OFT can choose to license or not to license a lender based on whether they are deemed fit or not.
The payday loan industry in the Canada has not been without criticism. According to experts, the reason why these loans are so popular is because of the economic situation. Which has seen the cost of living go up. Many people finds themselves in situations where they require emergency financial services on a regular basis.
The ease of accessibility of these loans coupled with unfavorable economic conditions is likely to make the industry even more popular. This will be among low income earners who are the most affected. There have been calls by different groups such as Compass to end the practice of payday loaning in its entirety; whether this will come to pass is yet to be seen.