What is a payday loan?
A payday loan is a type of short-term loan that can help you meet your cash needs immediately. Payments on these low-cost and fast loans are usually made within two weeks. Also, these loans are not accepted to cover long-term expenses. Before taking out these loans, it is important to know what you will receive and in return for what is expected of you.
difference between payday loans Canada and USA
How Do Payday Loans Work?
These loans are different from consumer and personal loans. Depending on where you live, you can get this loan online or through a physical branch. Also, in different states, there are different laws regarding the amount of loans, lenders, loan amount, and fees. Some states also have more or less strict laws.
Once the loan has been repaid, you may receive cash or a check, or the money may be credited to your bank account. You will then have to repay the loan in full plus interest and other costs on the due date, which is usually within 14 days or with your next salary.
Payday Loan in the US
Over two weeks, the average payday loan is $ 350. But these loans can range from $ 50 to $ 1,000, depending on state law. Currently, 32 states with a maximum loan ceiling allow the loans. Maine, Utah, Wisconsin, and Wyoming have no restrictions. Delaware, Idaho, and Illinois have the highest ceilings at $ 1,000, while California and Montana have the lowest at $ 300. Some states, including Nevada and New Mexico, also limit each down payment to 25% of a borrower’s monthly income. Also, loan costs, fees, and maximum loan amount are limited for 32 authorized states.
Payday loans in Canada
Loan amounts, repayment terms, and characteristics of lenders in Canada are somewhat different from those in the United States. But in general, the lender will deposit the loan amount into your bank account or give you cash. However, in some cases, the lender may ask you to get a loan with a prepaid card. In this case, activating and using this card may cost you more.
In this section, the most important items for these loans are summarized.
- Terms and Conditions – In the provinces of Alberta, British Columbia, Manitoba, New Brunswick, and Ontario, you have a maximum of 62 days to repay it. Some lenders require you to repay your loan on the same day you received your loan. In several provinces, a lender cannot extend or pay off your loan.
- Online or offline – The lenders may operate in a physical location or online. However, applicants should be wary of lenders; because many of them do not have a license and do not follow the provincial laws designed to protect borrowers. Therefore, caution should be exercised when referring to them physically or online. Also, during the process of borrowing, it may be a little difficult to resolve potential challenges from lenders who are online or outside of Canada. Also, watch out for online sites that say they offer these loans. Some just collect your information and give it to a real lender.
- Applicant Terms – In general, what lenders ask you to pay on the day of repayment are regular income, a valid bank account, and a permanent residence address.
- Clarity – The payment lender will ask you to sign an agreement that shows your loan costs, including interest, fees, and maturities. Read this document carefully before signing. Ask the lender anything you do not understand.
- Agreement with the lender – Before giving the loan on the day of repayment, the lenders oblige you to do one of the following on the day of payment:
- Fill out a form that allows the lender to withdraw the entire loan amount and commission directly from your bank account when the loan matures.
- Provide a check on the due date for the entire loan amount and fee.