Many families, with the recession and economic changes in recent years, are overcoming many economic difficulties. With an unemployment rate of 7.2% in Canada, many face a rather gloomy economic outlook. Many people have had to resort to a second job, move to lower-cost housing, or return to school to get a better salary or a new job to get things moving. Unfortunately, many are falling into the trap of payday loans becoming easily accessible to all.
Payday loans are loans available to families in need of money until their next paycheck (these loans are often the only option for some with bad credit). In order to get a payday loan, the only information needed is the proof of income – usually your last pay check statement and a piece of identification. Payday loans do not ask for information about your credit and do not perform lengthy application processes, unlike banking institutions that ask for a credit check or other personal information. The process of a loan ranging from $ 500 to $ 1,500 is quick and immediate. The majority of payday loans have a two-week limit with the principle and interest payable fourteen days after the loan date.
Although the idea of these loans seems reasonable, the institutions offering them are anything but generous. Payday loans have incredibly high interest rates, many as high as 600%. Indeed, a loan of $ 1,000 would become $ 6,000 after one year of interest. Although the majority of these loans are for a two-week period, they still represent $ 230 more due to the balance of the loan. This amount is significant for families living one paycheck at a time, even mortal for those receiving checks insufficiently large in order to repay the loan. The latter are forced to take a larger loan to repay the first, forming a vicious circle of loans that can ruin financial stability and cost several thousand dollars at the end of the year.
Several solutions are available to people overcoming financial difficulties at the end of the month, including personal loans. These offer good solutions that can relieve temporary monetary problems. Unlike payday loans, personal loans offer much smaller interest rates that typically range between 4% and 8%. In addition, many of these loans can be done over longer periods of time, usually one year or more. So families and individuals have more time to save before having to repay the loan. For example, a one-year loan with an 8% interest rate increases by just over $ 43, compared to a $ 6,000 payday loan. Although many personal loans require a credit check, this is not the case for everyone.
Although many families want to avoid financial help, it is sometimes unavoidable to ask for help. Personal loans are a good option for those overcoming for the first time financial difficulties or for those caught in the vicious circle of payday loans. Offering smaller interest rates over a longer period of time, personal loans can be repaid with a schedule instead of immediately with high costs. If you find yourself in a situation where you are drowning in your finances and can not come to the surface on your own, consider personal loans and not payday loans.