If you’re thinking about applying for a personal cash loan online or at a store near you, then you’re probably in a situation where you need money fast and are looking for the quickest and easiest way to get it. When your savings are exhausted, your credit cards are maxed out, and you can’t depend on support from family or friends, it can seem like the only option is to borrow from a payday loan company. These lenders often try to sell you on the idea of 100% guaranteed approval with no credit check and cash delivered through speedy direct deposits or e-transfers. Getting a loan from them can indeed be easy, but the problem is what happens after.
What Happens When You Can’t Repay a Payday Loan?
While a payday loan is expensive, it won’t do too much damage if you repay it on time without getting into more debt. The problem is that many Canadians who get them run into problems paying them off. After all, an online cash loan won’t solve underlying financial difficulties like not having enough income. In fact, payday loans make those difficulties worse because now you have to pay the loan interest on top of everything else.
Canadians who can’t repay their payday loan can end up renewing it or getting another loan to cover it, adding onto the interest. The new loan could be even bigger if they also need to cover their expenses for the next 2-week period. If they still can’t repay it later, then they might get into even more debt just to survive. Many provinces require payday lenders to stop roll-overs and change loans into installment loans to provide more structure for repayment. But as the debt keeps growing, it will inevitably reach a point where the loaning stops, and the collection calls take over.
This content was originally published here.