The novel coronavirus (COVID-19) pandemic has brought many challenges for people around the world — both physically and financially.
According to Macleans, as of April 28, Service Canada had received 7.3 million applications for the Canadian Emergency Response Benefit (CERB). Statistics Canada reported that one-in-five Canadian businesses had laid off more than 80% of their staff.
With so many Canadians out of work, people are increasingly relying on reduced income to get by. While emergency response efforts offer some relief, it may not be enough to pay the bills — especially for those who live in more expensive areas of the country, such as Toronto.
In turn, this is leading to another worrying trend – a rise in payday loan seekers.
Payday loans are loans that offer an advance on a paycheque. The problem with these types of loans is that they come with sky-high fees and interest rates — the Toronto Star recently reported that annual interest rates can be up to 390% with a payday loan. These loans also come with incredibly short repayment schedules — within 14-to-62 days.
While you can get fast cash from a payday loan, it comes with a lot of strings attached. It’s easy to get sucked in a vicious cycle, where you are always repaying a loan with a loan.
Look at it this way: if you don’t have the cash today, will you have the cash in two weeks to pay back a payday loan — plus interest and fees? Likely not.
Payday loans also don’t report the Canadian credit bureaus, so if you are using them to rebuild credit they will not help.
Alternatives to Payday Loans
Luckily, there are alternatives to payday loans that still offer same-day cash, but without the strings. We’ll explore three options below.
a) Borrow with Your Home
If you own your house or condo, you might be able to borrow based on the equity available.
You might be eligible for a mortgage refinancing or second mortgage. However, there is also another option: a home equity personal loan.
If you have equity in your home, you can get a fast, open, same-day home equity loan with payments that fit your budget. This is different from a secured loan or a second mortgage. It’s based on your responsible money habits in the past.
b) Borrow with Your Car
If you don’t own your home, you might own a car. This can be another source of same-day income.
For instance, at Prudent Financial Services, we offer same-day loans of up to $20,000 if you borrow against your paid-off vehicle that is six years old or newer. All loans are open and can be repaid at any time – plus they report to the Canadian credit bureaus.
c) Bad Credit Personal Loan
A third type of same-day loan is the bad credit personal loan, which gives you up to $5,000 with low interest rates and affordable fees. For example, the total annual cost of interest and fees on a $1,023 loan begins at $239.89.
Eligibility and interest rates depend on your job, income, debt, and assets.
We know the COVID-19 pandemic is difficult for everyone, but if you need extra financial help to get by you don’t have to rely on payday lenders.
At Prudent Financial Services, we offer bad credit car, personal, and home loans for people in Toronto and the GTA. We’re currently open by appointment. Learn more about your options by calling 1-888-852-7647 or visiting www.prudentfinancia.net.