It’s February and the month has been aglow with talk of love and romance. However, one relationship that is waning in appeal (and rightly so) is Canadians’ love affair with payday loans.
These small, short-term unsecured loans are rarely linked to a repayment date aligned to a borrower’s payday—but that was the initial concept: If you are short of money and can repay a loan once you get paid . . . then come on down!
Sometimes these loans are called ‘cash advances’ and they typically rely on the borrower having previous payroll and employment records.
Payday loans may seem attractive to some consumers in need of ready cash but consider that for a $15 charge on a $100 14-day payday loan the annual percentage rate is over 391%*!
In addition to being expensive, payday loans are also a short-sighted way to address financial troubles. If you are regularly strapped for cash and have maxed out other (more cost-effective) sources of credit it may be a sign that you are carrying an unreasonable and unmanageable debt load.
Payday loans will not help ease your debt problems; they are an expensive way to just keep your head above water. Bottom line, if you are struggling to make ends meet and drowning in debt repayment, it’s time to look at available options to solve your problems—for the long term.
You might consider a consolidation loan (to address your debts), but you may not qualify because of your debt ratio or impacted credit score.
One popular option is a Consumer Proposal. It focuses on what you are capable of paying (not just what you owe)—this could be 75% less than the total amount you owe. You can qualify for a Consumer Proposal if you owe up to $250,000 of non-mortgage debt—and most debts can be covered. This essentially allows you a fresh start.
With the guidance of a Trustee you negotiate to pay creditors all, or a portion, of your debt over a specific time period or to extend the time allowed to pay the entire debt. You need the majority of creditors to agree to the proposal—then all unsecured creditors are bound by it.
It’s time to break off the unsatisfying relationship with payday loans and develop a sound financial future.
If you are facing financial struggles or would like some help with managing your debt—one of our professionals is available to discuss your situation. There are many options available to help and you may not need to go bankrupt. Contact us for a confidential, no-obligation, complimentary consultation. Call us toll free from anywhere in Alberta 310 8888. www.gt.alger.ca
*Estimate, actual amounts may vary.