In today’s challenging economy, it’s common for unexpected expenses to pop up and leave you financially strapped. Many Canadians are on the same page, as the rising inflation rate has seeped into their costs, making it difficult to pay for unforeseen expenses. According to Statistics Canada, “one in four Canadians are unable to cover an unexpected expense of $500.”
Financial problems can significantly contribute to stress, but the good news is you can use payday loans for temporary financial relief. When considering this financial tool, it’s important to first understand exactly what is a payday loan.
Although payday loans can be a helpful tool for many Canadians, you must familiarize yourself with payday loans definition, how payday loans work, and what you need to apply for a payday loan to make informed decisions. Taking a loan without assessing your financial situation or understanding the process can add to your financial stress. Some payday loans come with hidden fees and high-interest rates that can leave borrowers in even deeper debt.
In this guide, we will answer several questions, including what are payday loans, how payday loans work, and how to get a payday loan.
What is a Payday Loan?
The first thing you will want to learn when looking for extra cash is, what is a payday loan? Payday loans, or cash advances, are short-term, high-interest loans designed to provide borrowers with quick access to money. These loans are typically used to cover unexpected expenses or to bridge the gap between paychecks. GoDay offers fast payday loans online in Canada to help individuals in need of quick cash. We understand that financial stress can be a burden, so we streamline the borrowing process by offering our roles online – meaning you don’t have to visit a retail store to get a loan.
Payday loans usually cover unexpected expenses, such as car repairs or medical bills, or bridge the gap between paychecks. However, if you need more funds to cover large expenses, GoDay also offers installment loans in Canada to help individuals and families get relief from unexpected financial burdens.
How Do Payday Loans Work?
Once you understand what a payday loan is, it’s essential to learn how payday loans work.
Application Process
Payday loans work by providing borrowers with quick access to cash. GoDay’s lending process takes place entirely online. You can quickly apply for a loan and find out if you meet our requirements in under five minutes. Once you find out you are eligible for a loan, you can choose how much you want to borrow and provide some basic details, such as proof of income and a valid checking account. Once this simple process is complete, you can receive your loan in as little as one hour after the approval.
Important Information
Although applying for a loan and receiving the money is simple, our clients often have more concerns related to one of the most common questions: how does a payday loan work? To ensure our clients are fully aware of the process, our dedicated customer service team can answer all common questions about payday loans and give you more insight into the borrowing procedure.
How to Get a Payday Loan?
A payday loan may be a viable option if you require quick cash to cover unexpected expenses. GoDay operates 100% online, so you don’t need to submit any documents. Then, you will fill out an application and receive a loan decision within minutes. Most funding is by email money transfer and generally takes 30-90 minutes from when the loan was funded – depending on the Bank. GoDay also offers clients funding by direct deposit – generally it’s a same day deposit but can sometimes be next day depending on the funding time and the bank. But how does a payday loan work? Essentially, it’s a short-term loan typically due on your next payday. The loan amount is usually based on your income, and the fees and interest rates can be high, so it’s important to carefully consider whether a payday loan is the right option for you before taking one out.
You can contact our customer service team or utilize the resources on our platform to understand how to get a payday loan, as the process can vary depending on the province. We can help you get familiar with the process based on your location to ensure you’re making an educated decision before applying.
What Do You Need to Apply for a Payday Loan?
One of the most common questions borrowers ask before applying is, what do I need for a payday loan?
We collect everything online, so you don’t have to submit any ID, pay stub, or bank statement to apply. Some lenders may also require a post-dated check or access to your bank account to withdraw the loan amount and fees on your next payday. By knowing what you need for a payday loan upfront, you can streamline the application process and increase your chances of approval. Gathering all the necessary documents can help you answer a simple question, is a payday loan right for you based on your current financial health?
Although we do our best to accommodate all our client’s unique needs, it’s important to note that not everyone is eligible for a payday loan. If you have a poor credit history, limited income, or other financial challenges, you may be denied a payday loan, which can cause financial stress. If that’s the case, you may need to explore alternative options, such as a personal loan or credit card. It’s important to carefully consider your options and only take out a loan if you’re confident you can repay it on time.
How Much Do Payday Loans Cost?
The exact cost of a payday loan can vary depending on the lender, loan amount, and province regulations. Typically, payday loan fees are calculated as a percentage of the loan amount, with the average fee ranging from $14 to $17 per $100 borrowed. For example, if you borrow $200, you may be charged a fee of $20 or more, which must be paid back in addition to the loan amount.
When looking for payday loans in Ontario, it’s important to note that Ontario laws limit fees if you choose a licensed lender. A licensed lender only charges three fees:
- A finance fee of $15 for every $100 you borrow.
- An NSF fee of $25 if you don’t have money in your account for your payment.
- A late interest charge of 2.5% per month if you don’t meet your loan obligations.
What Happens if You Can’t Repay a Payday Loan on Time?
Although you are protected by Ontario laws in terms of eligible fees, the inability to repay your loan on your next payday can lead to additional fees, and interest can accumulate quickly, leading to a cycle of debt that’s difficult to break.
So, before you ask yourself how many payday loans can I get, ensure that you are financially capable of repaying the first one to avoid debt and financial stress.
Some of the consequences of the inability to repay a payday loan on time include the following:
- Additional Fees and Interest: You may be charged additional fees and interest on top of the amount you owe, making it even more challenging to repay the loan.
- Collection Attempts: The lender may attempt to collect the debt from you by contacting you or sending letters, emails, or texts. They may also try to withdraw the money directly from your bank account.
- Damage to Credit Score: If you have a consistent pattern of late payday loan payments or default on a payday loan, it can be reported to credit bureaus and negatively impact your credit score.
- Legal Action: In some cases, the lender may take legal action against you, leading to court fees, attorney fees, and wage garnishment. Some lenders may offer options such as a repayment plan or a loan extension, but it is important that you read the terms and conditions carefully to make an informed decision. You should also communicate with your lender if you need more time to repay your payday loan.
Can You Cancel a Payday Loan Application?
In some cases, you can cancel a payday loan application without any penalty if you do so within a certain period. However, the process and the timeframe for cancellation may vary depending on the lender and your location.
Although borrowers can cancel their application, some rules and regulations apply in this scenario. The cancelation period gives you the option to cancel your payday loan agreement within two business days after signing the agreement. It gives borrowers time to reconsider their decision if required and also enables them to understand the terms and conditions of the loan. If the loan is cancelled during the during this time, the borrower is only responsible for repaying the principal amount borrowed, and no additional fees or charges are assessed.
Some Canadian provinces have similar protections when it comes to loan cancellations. For example, payday loans in Toronto have similar regulations as most cities in Alberta. However, the rules in other provinces can vary.
Getting a Payday Loan from GoDay
We offer flexible borrowing options to help borrowers across Canada. Contact us today to learn how our quick and easy application process can help you relieve financial stress.
