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You’re in a tight spot and you need money – fast. You see a commercial or drive by a sign that seems to have the answer to your dilemma: a payday loan.

Stop! Payday loans may be quick cash, but they are not the best answer, no matter how badly you need the money.

Let’s look at a common scenario:

Jim needs $1,000 to pay for car repairs and he doesn’t have the money in his account. But he needs the car fixed right away to get to work. So, he goes to a payday lender and gets an advance on his paycheque for $1,000. He figures he’ll be able to use the money from his next paycheque to pay off this loan. If he doesn’t fix the car, he won’t be able to get to work and he won’t be making any money at all.

A payday loan is the better choice, right?


Even if Jim does get the $1,000 and is able to get his car fixed and return to work, he’ll be stuck with consequences. These include:

  • He’ll have to pay back the $1,000 payday loan PLUS interest and fees.

A payday lender can charge up to $15 per $100 borrowed, so Jim might have to repay an extra $150 in interest and fees alone.

  • He’ll have to repay the loan in full in a fixed time frame: normally 14-to-28 days, but no more than 62.

The exact timeframe depends on the lender, but all payday loans must be repaid within 62 days, and many lenders require it sooner.

  • He will still have to pay his other expenses.

Even if Jim can pay back the $1,150 within the timeframe, he’ll still have other expenses to meet – like his mortgage, bills, groceries, etc. Unless he brings in more income, he’ll likely run into trouble meeting those other obligations after he pays back the payday loan.

This can turn into a vicious cycle of debt.

What’s the better option?

Thankfully, payday loans aren’t the only option for when you need quick cash.

A much better answer is to take out a secured personal loan and negotiate a fixed repayment schedule with terms you can live with.

When you choose a personal lender, you should look for:

  • Fixed interest rate
  • Reports to the credit bureau
  • Fast turnaround time
  • Clear repayment schedule and terms

For instance, at Prudent Financial you can borrow up to $30,000 in minutes using your home or car equity. This could allow Jim to pay for his car repairs and pay back the loan at a lower interest rate over a longer time frame.

If you’ve found yourself in a financial tight spot in Toronto or the GTA, don’t go for the payday loan answer. Call us first.

Contact Prudent Financial for a free consultation. Call 1-888-852-7647  or visit www.prudentfinancial.net.