The Facts of Life Where a Payday Loan is Concerned


A payday loan is a short-term and unsecured loan, usually payable in two weeks, which almost anybody with a job can avail of. The beauty of this type of loan is that you need not even have a good credit standing, not even personal and real properties as loan security! Just so long as you have a job and an employer who can vouch for that job, then you can take out the loan.

General Criteria

Depending on the credit company, the criteria to qualify for a payday loan are quite straightforward and simple. Obviously, you must have a job and a regular paycheck with which to pay for the loan. If you do not have a job, then a small business that allows you regular income would do. The period of employment can range from as little as three months to as long as one year, whether regular or temporary in nature. Likewise, income range is variable, though, in most cases, you need to earn at least $1,000 a month. This way, if you take out a $100 loan and pay the interest of say, $25, you will still have plenty of funds left.

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Of course, you need to be of legal age, which in Canada is 18 years; companies will also specify the residence limitations such that only residents of a particular state or city are qualified. For most companies, the presence of a personal checking account is an advantage, though you can also personally hand in your payment on your due dates.

Processing and Amount of Loan

Each credit company will have their own set of rules on the allowable amount of payday loan, processing time, credit checks, interests, and costs added to the loan. Basically in Canada, you can avail of these interim loans in amounts from $100 to $1,500. The processing time is usually within the day since the credit checks can be done quickly and discreetly.

For those wishing to avail of a payday loan on their first try, a little education on the interests and fees charged is valuable. The industry charges from between $15 to $30 interest for every $100 loaned, which translates to 15-30% interest a month, at the very least. However, this is deceiving as the rates are not as usurious as one would think. Remember that the risk of non-payment is also high, plus the benefits of ease of applying and the quick release of the loan outweigh these costs.

Options on Payment

If you are a good borrower, then paying the principal loan and the corresponding interest in full on the due date should not be a problem. However, emergencies have a way of adversely affecting finances in a domino-like pattern, which in the first place was why you might have taken out the payday loan. If this happens, you can just pay the interest on the existing loan and renew it.

With this type of loan, the facts of life that it must be paid or face the consequences remain. Either you pay it or you pay jail time.


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