Must read: A warning about payday loans
Payday loans are heavily regulated in provinces – but not the territories – and for good reason: Payday lending is one of the single most predatory forms of credit available and can easily ruin your finances when you’re already in a pinch.
When APRs can reach well over 400%, it’s glaringly clear that these seemingly quick fix-it loans are anything but. Provincial regulations are put in place in order to protect consumers – but rules and regulations vary dramatically between each province. But ultimately, these protections are put in place to help borrowers avoid a debt spiral that payday lenders set them up for.
Before you dive into a product marketed as a one-stop financial Band-Aid, consider your alternatives. Though they aren’t significantly better, installment loans can come with slightly less egregious terms and more manageable payments. And while it may require a level of humility and openness, asking to borrow money from friends or family could be another possibility.
You can also look into alternatives to borrowing. Services may be available in your area to those in need. Even if you aren’t sure if you qualify, it’s worth researching local assistance programs for food, housing and other necessities. These services may also be able to help you identify and address any structural issues that can keep you in debt, such as a lack of budgeting or overspending.
Though you may not have a lot of extra time, a side gig could also be an option. Ideas include driving with a ride share service like Uber, walking dogs, participating in research studies or even taking online surveys to earn more cash. If you find yourself regularly needing small amounts of money to last you through the week, consider exploring ongoing freelance opportunities in your area of expertise — Upwork and Fiverr are a few websites that connect freelancers and clients.
Payday loans have both a high rate of default and repeat borrowing, which could trap you in a debt cycle and even more financial distress than when you started. By researching your many options, you may be able to avoid getting caught in dangerous lending, while still getting the money you need.