Can Payday Loans Eliminate Your Debts?

Can Payday Loans Eliminate Your Debts?

Everyone can live a complex financial situation. If you have problems filling the end, you've probably been looking for ways to get out of it. Did you think about lending on the salary? 

Do you believe that payday loans can help you get out of debt? Before you use it, here's what you need to know.

What is a payday loan?

What is a payday loan?

Payday Loan is the amount of money a private company agrees to borrow for a short while, until the next working day. Generally, companies provide loans ranging between 30 and 50% of net salary. To return the lender, you must:

Give him a postal verification covering the amount of the loan, as well as any inherent costs or;

Give him permission to withdraw that amount from your bank account as soon as you receive your salary.

Although a payday loan may be attractive, you should know that this form of loan is very expensive. Can I payday loans with you in debt? Nothing is less certain. In fact, there is even the risk of entering into multiple debt if you can not return the amount borrowed until the due date. Then, even if you can repay the loan, you may not have enough money to pay until the next next payday... which leads to the risk that you will have to borrow again.

Do not sign without reading a contract

A winning loan should be considered as the last resort. Never sign a contract without reading it in its entirety. The fees that can be requested are numerous:

  • Open fees for opening files;
  • administrative costs;
  • interest expenses;
  • late fees;
  • And more.

The fee charged may be so large that the total cost of your loan will be equivalent to a loan made at an unbelievable interest rate. According to the Financial Agency for Consumer Finance in Canada, a payday loan may be equal to the interest rate at an interest rate of about 450%, 650%, or even more in some cases! Before you sign up, make sure you know the total amount you will pay and request a copy of the contract.

Other Debt Elimination Solutions

Before thinking that only payday loans can help you out of debt, have you considered other solutions? Here are some that will cost you much less:

  • Overdelivery protection applied to your bank account;
  • Personal Line of Credit;
  • Cash advance on credit card.

Finally, here's the best solution: If the problems with your money are repeated, talk to a financial advisor.