The popularity of payday loans in Canada has become problematic as about 7 to 10 percent of the population has to use payday loans to cover all their expenses on a daily basis.
In addition, about 1 in 10 Canadians who go bankrupt do not only have payday loans, they usually have more than one full salary!
The situation usually happens like this: your rent must be paid right away but you do not have the money in your accounts, you have not done groceries this week and your car breaks down or your level gasoline has almost empty, but of course your next paycheck is due for in a week. Unfortunately, after all these vicissitudes, a payday loan seems to be the perfect solution since you will be able to get the small amount of money you need right away and then pay off the loan once you get your check from next pay. The hidden screw here is that the payday loan will then force you to get another one for the next week, then the next one, and so on and eventually, you’ll be stuck in a cycle that’s very difficult to break.
When you find yourself in the payday loan cycle, it may seem like there is no way out, but here are some tips to break the cycle, get help, and start building a portfolio. sound financial.
How to eliminate your addiction
If you are stuck in the payday loan cycle and have decided that you need to get away with it, the first thing you need to do is eliminate your dependence on loans as much as possible, if not completely. Here are some things you should do:
Do not take a new payday loan every week; you will never be able to repay them and the cost will become more than financial.
If you desperately need money to pay your rent or something of the same importance, find an alternative loan. A personal loan from a private lender repayable in installments spread over a longer period of time is one of the best options.
If your money problems come from expenses for which you can not determine their origin, it will be necessary to make a budget or find a way to track each of your expenses. Understanding where you spend and how you spread your money will help you find places to save.
Start saving for an emergency or for your future. If you have some savings, then you will probably not be tempted to take payday loans.
Now that you are on your way to eliminating your dependency on payday loans, you will need help in repaying the remaining debt. The payday loan cycle tends to entice us and take us hostage. Going for help should not be considered a failure but an important step to success and get rid of this financial burden.
Consider consolidating your debt
If you have several payday loans as well as other debts, a consolidation of these could be exactly what you need to break the payday loan cycle and become debt free. If you consolidate your debts, you will only have to make a monthly payment (and maybe even less) instead of making many different payments for many different companies.
Unfortunately, if you choose to enter a debt management program to help pay off your debts, most if not all payday loan lenders will refuse to participate. So, if you decide to consolidate your debts, you could be limited to these two options:
A consumer proposal: As an alternative to bankruptcy, you work with an administrator of a consumer proposal who will negotiate with the creditors on your behalf. This agreement is legally binding, protects you from collectors and will ensure that you repay a portion of your debts with a single monthly payment.
Bankruptcy: If you have decided that there are no other options for you, going bankrupt may be the best option. Make sure you have exhausted all other options and are ready to deal with the consequences.
Understand less rights and freedoms
It is of utmost importance that you know and understand your rights if you have or plan a payday loan.
While traditional lenders are governed by the Criminal Code of Canada, which stipulates that interest rates must be less than 60% per annum, payday lenders are regulated by provincial governments.
Every province in Canada has its own laws governing payday loan companies so make sure you get the right information for your province. For example, payday loans are completely prohibited in the province of Quebec, but in Ontario the Ontario Payday Loan Act regulates them.
Regulations to know
The bearings are illegal. You can not get a new loan until you have paid off your current loan.
You must have a two-day grace period in which you are allowed to change your mind, and you will be able to repay the money free of charge.
A contract indicating the amount of money borrowed, term of office and all costs related to the loan must be provided.
The payday loan lender must provide you with the full amount of the loan without delay.
You may not be required to make payments before the due date.
The payday loan cycle may seem like impossible to break, but it is not. You must start by breaking your addiction and then ask for help as soon as possible. It can take a lot of time and effort to get there but it can be done to finally get rid of this financial burden.