Payday loans can surely help you tackle your urgent financial needs, but it really makes sense to seek a loan after educating yourself about the process. While there are many lenders offering payday loans online in Canada, they may have slightly different requirements to take you in as a customer. The basics, however, will remain the same. For instance, your payday lender will ask you to furnish them with a proof of regular income.
It means you need to show the ability to repay the loan using your source of regular income. Similarly, some lenders won’t offer a loan if you don’t have a bank account; however, some lenders let you take the cash from their physical branches, so they aren’t that fussy about having a bank account. And of course, you need to have a permanent address and Canadian citizenship as well.
Bear in mind that as you will be repaying the loan with your next payday, some lenders might want you to complete a form, giving them the right to withdraw the loan amount in full, including fees from your bank account on the due date. That is called a pre-authorized debit, so know if your lender wants you to do that. If that’s not the case, you’d at least be required to offer a post-dated check for the loan amount and fee to be able to get a loan.
To ensure you don’t end up paying more than what you should be sure to compare your options online and understand the agreement before signing the dotted line. Read your agreement thoroughly because it will highlight the total loan amount as well as the fees, interest, and of course, the due date. Remember, the payday industry is much better regulated these days, but you should still spend some time learning about the rules by getting in touch with your territorial or provincial consumer protection office.
What to Expect When You Fail to Repay Your Payday Loan
If you think you don’t have to worry much when you fail to repay because payday lenders are not like banking institutions, you’re wrong. You may have to deal with serious consequences for not being able to repay your loan in full by the due date. Here’s what you may have to experience:
- Be ready to pay a late fee in case you don’t get enough money in your account. This is the least you should expect when not being able to pay your loan.
- Get ready to notice the interest accumulating over time and making it even more difficult to clear your dues.
- Don’t be surprised if payday lenders decide to call your relatives, friends, and employers to collect their money.
- Be ready to hear from collection agencies because it is not unheard of payday lenders selling your loan to these agencies. These agencies could sue you and make sure to highlight your inability to pay the debt on your credit report.
You’re going to find it quite hard to deal with collection agencies, as they could also seize your property to recover the money. Therefore, you need to be very careful when deciding if you really want to take out a payday loan, and if you do, decide how you’d manage to repay it in a timely manner to avoid late fees, serious interest, and other serious consequences.
Few Things to Do If You Can’t Repay the Loan
Your financial circumstances can take a wrong turn at any time and that can keep you from fulfilling your promises. Sometimes, you take out a payday loan because you know you can repay it on time, but things take a nosedive, leaving you with no money to manage your financial responsibilities. If it seems difficult to repay the loan, here are a few things to do.
Be Sure to Connect with Your Lender
It is important to let your lender know that you’re having trouble repaying the loan, and by law, it’s their duty to guide you with sources offering independent debt advice. Sometimes, you can develop a better repayment plan working with your debt advisor, which will help suspend the recovery of the debt for some time.
Moreover, letting them know in advance may help make them more considerate about your situation and even offer a reasonable repayment plan. They might be willing to suspend charges and freeze interest to help you repay the loan.
By explaining your situation in a timely manner, you’d be able to convince them to avoid bombarding you with emails, calls, and text messages, and even accept small token payments for a short time until you find a way to clear their dues.
Consider Cancelling the Recurring Payment
Another thing you should do if you don’t seem like having the funds to repay the loan is to cancel the recurring payment. You should do it if you think you won’t have money for essentials like rent, food, or utility bills if your lender takes the money from your bank account.
If you want to do it, be sure to inform your lender about it. Also, don’t forget to note the date and time when you asked your bank to stop the recurring payment. Banks will lose the authority to make a payment on your behalf but even if they do, you can ask for a refund.
What’s more, you may also benefit from refusing to get your loan rolled over. There are rules to follow. If you’re in provinces like New Brunswick, British Columbia, Alberta, Ontario, or Nova Scotia, your lender simply doesn’t have the right to roll over your payday loan. Similarly, a lender can’t ask you to sign a form to get the money transferred directly to them if you’re in Manitoba, British Columbia, Alberta, Ontario, Nova Scotia, or Saskatchewan. So, know your rights when you find yourself in a financial mess.
Conclusion Understand that payday loans can be of great assistance to someone having a hard time arranging money quickly to deal with an expense. Just ensure to use an authentic lender after comparing their offers online and always know how to proceed in case you think you won’t be able to repay the loan by the due date.