{"id":823530,"date":"2019-12-16T20:31:29","date_gmt":"2019-12-17T01:31:29","guid":{"rendered":"https:\/\/www.finder.com\/ca\/?p=823530"},"modified":"2025-05-22T16:32:20","modified_gmt":"2025-05-22T20:32:20","slug":"payday-loan-cycle","status":"publish","type":"post","link":"https:\/\/www.finder.com\/ca\/payday-loans\/payday-loan-cycle","title":{"rendered":"How to get out of payday loans"},"content":{"rendered":"

If you had to borrow a payday loan and couldn’t repay by the deadline, you might have chosen to take out another “just to get by.” This probably led to an additional loan with more fees, likely followed by another and another, and soon the debt started to pile up. If you find yourself in this situation, there’s still hope \u2013 you can get out of a payday loan cycle and avoid the huge costs of debt. All you need is the right strategy and proper planning.<\/p>

What to do if you’re struggling with how to get out of payday loans<\/strong><\/h4>

If you’re experiencing financial hardship and would like to speak to someone for free financial counselling to get payday loan help, you can call Credit Counselling Canada at 1-866-398-5999<\/a>. It’s open from 8am to 5pm, Monday to Friday.<\/p><\/div>

How does the payday loan cycle of debt work?<\/h3>

Payday loans are loans that come in the form of a cash advance \u2013 usually for small amounts of up to $1,500 \u2013 that you’ll need to pay back by your next paycheque. They are relatively easy to qualify for even with bad credit, making payday loans an easy and convenient way to get your hands on fast cash.<\/p>

But that convenience often leads to trouble…<\/p>

The problem is that payday loans often come with extremely high fees that can cost you hundreds of dollars on top of what you borrow. This can lead you to owe more than what you can afford to repay each month. When that happens, people often end up borrowing a second payday loan to cover your rent, groceries and other expenses.<\/p>

In the end, you may find that you’re stuck in a loop of taking out and repaying payday loans like clockwork in order to cover the loan fees and your expenses. This can end up costing you thousands of dollars above what you originally borrowed over a long period of time.<\/p>

How to get out of payday loans<\/h3>

One of the best things you can do when considering how to get out of a payday loan debt cycle is to find a way to consolidate your debt and lower your monthly payments. Because payday loans carry extremely high interest rates \u2014 typically over over 300% APR \u2013 you’ll want to stop borrowing and merge all your loans into one larger loan with a lower, more manageable APR. In fact, a survey conducted by the Financial Consumer Agency of Canada found that one-third of the people who use payday loans repay it using something other than their paycheque.<\/p>

You can get payday loan help using any of the following methods:<\/p>

  1. Debt consolidation loan<\/a><\/li>
  2. Balance transfer credit cards<\/a><\/li>
  3. Debt relief companies<\/a><\/li>
  4. Nonprofit organizations<\/a><\/li>
  5. Asking friends or family for help<\/a><\/li><\/ol>

    1. Debt consolidation loan<\/h3>

    If you’re stuck in a cycle of applying for payday loans to get to your next paycheque, you might benefit from a debt consolidation loan<\/a>. These loans are offered by reputable financial institutions, and many are designed for borrowers with bad credit. You’ll typically just need to be able to prove that you have enough income coming in to cover your repayments.<\/p>

    Once you’re approved for a debt consolidation loan, you can use it to pay off your payday loan. You’ll then be able to carry that balance forward with lower interest rates and a longer repayment term. This means that you’ll be able to make small monthly repayments that fit your budget, and you won’t be stuck paying hundreds of dollars in fees every two weeks.<\/p>

    What if I have bad credit?<\/h4>

    You can still get payday loan help even with bad credit through debt consolidation loans designed for people with bad credit<\/a>. You can expect interest rates on these types of loans ranging anywhere from 10% to as high as 50%, which is higher than you’d get with a standard loan. But a bad credit debt consolidation loan will still be much cheaper than the hundreds you’ll pay in interest with a payday loan.<\/p>

    If you’re borrowing under $2,000, you may also be able to apply for a no credit check loan without any hassle. Alternatively, see if you can enlist a co-signer.<\/p><\/div><\/article>

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    \nMust read: <\/span>Best debt consolidation loans in Canada<\/a>\n<\/div>\n<\/article>

    How to compare debt consolidation loans<\/h4>

    If you think that a debt consolidation loan is the right fit for you, you’ll want to start by comparing lenders. You can begin to look at some of the following features to find the best loan for you:<\/p>