Monthly Archives: September 2019

Are Payday Loans Quick to Process?

Chances are, if you’re thinking about getting a payday loan, you need money as quickly as possible. Every second spent waiting for a loan to be accepted and processed is a second closer to an overdraft fee, a bounced check, late rent payment, cancelled utility service—the list goes on!

Time is often essential when it comes to your personal finances, which is why so many Canadians tend to opt for payday loans. Payday loans are the best way to get money quickly—in fact, it’s what they are most commonly known for.

Whether you call it a payday loan, a cash advance, or a short-term loan, the basic goal is the same: to get access to funds as quickly as possible.

But just how quick are payday loans? How much time are you really going to spend filling out an application and waiting for a lender to decide whether you are approved?

In the sections below, we’ll take a look at the payday lending process to show you exactly what you can expect—and how fast you can expect a payday loan to really be.

Are Payday Loans Quick to Process ?

First Things First: What is a Payday Loan?

Before we dive into the step-by-step process of getting a payday loan, let’s talk basics. What is a payday loan? A payday loan is a simple, short-term loan that is designed to last from one paycheque to the next, usually in 30-day increments. All payday lenders are different, but most will let you borrow in amounts starting at $100 to as much as $1,500.

There are plenty of reasons that people choose to take out a payday loan, but here are some of the most common:

  • Because their credit score is too low to qualify for a traditional bank or credit union loan
  • Because they don’t meet income requirements for another lender
  • Because their bank account is running low between paycheques
  • Because they need to cover an urgent, last-minute expense

And finally, the most popular reason to choose a payday loan is to get access to funds as quickly as possible. Payday loans let you skip the hassle of filling out long applications and waiting days to hear back on an approval, making for a seamless borrowing process.

Payday Lending Process: Step By Step

Just like banks and credit unions, payday lenders are not created equal, and all have different processes and requirements. Some payday lenders may ask borrowers for additional information, such as whether you are a homeowner or a renter, or require that you fax additional verification of employment and income before getting a payday loan.

However, there are some common threads among payday lenders that make payday loans the quickest options for borrowers that need cash right away. Here’s the general process:

1. Apply online

Payday lenders offer an entirely online application process, meaning you can apply for a loan from anywhere you have an internet connection. Whether it’s from the couch corner, your favorite coffee shop, or sitting in traffic, payday lenders make it easy to apply.

Even better, applications can be filled out in 15 minutes or less, fitting nicely into even the most hectic of schedules. Say goodbye to scheduling time to sit in a stuffy office and talking with a loan officer—with an online application, you can get a loan completely on your time.

2. Get approved

Approval for a payday loan can be granted within minutes of submitting your application, erasing all of the stress and anxiety that comes with sitting and wondering whether you will be approved. You’ll get an email notifying you of your approval, which will take you to a loan agreement and all of the repayment details.

Why Do People Use Payday Loans?

Anyone with a bank account knows the drill—after so many days of positive banking history, you’re going to start getting bombarded by letters and emails to sign up for their newest lending products. We’ve all seen the same headlines: Get a low-interest business loan today! Sign up for our credit card with zero percent interest for six months! 

With so many ways to get a loan, why do people use payday loans? Why not just go to your bank or credit union and apply for a loan or a line of credit? Well, there are plenty of reasons that Canadians choose to get a payday loan instead—and there are even more ways to use a payday loan than you might think.

In the sections below, we’ll look at a few of the reasons why people use payday loans instead of traditional banks or credit unions. We’ll also show you some of the most common ways that borrowers put their payday loans to good use to help you determine if payday loans are right for you.

Here for the money, honey

Personal Loans vs. Payday Loans: What’s the Difference?

Before you run down to your local bank and start filling out paperwork, you should know the difference between bank loans (personal loans) and payday loans. Many times, people use payday loans simply because they make more sense for their financial health and their needs. Here are a few of the key differences between personal loans and payday loans:

Credit scores

Getting a personal loan from a bank often mean meeting high credit score requirements. Banks consider average credit scores to fall between 620-679. If your credit score is lower than 620—or if you have no credit history—you could be denied a loan (or suffer high long-term interest rates as a result).

Payday lenders often have much more relaxed requirements when it comes to credit scores. Although your credit score can still determine the type of interest rate you get, you won’t be denied a loan purely from your credit history. In fact, using a payday loan as a means to build your credit is one of the many reasons Canadians choose to take out their loan in the first place (but more on that later).

Eligibility requirements

Along with credit scores, banks and credit unions may have certain eligibility requirements to meet before you are eligible for a personal loan. All lenders are different, but some of the most common criteria include:

  • Duration of banking history
  • Proof of past lending experience
  • Annual income
  • Tax information, mortgage statements, rent statements, etc.

And of course, credit unions have their own unique requirements for membership, which typically include specific employment or residency. If you aren’t already a member of a credit union, you’ll have to find one to join—and make sure you meet their criteria.

Payday lenders are well-known for their relaxed eligibility requirements, making short-term loans much more accessible. The best payday lenders in Canada will keep it simple, with eligibility requirements like:

  • At least 60 days of banking history
  • Proof of regular income
  • Being at least 18 years of age

Loan amount

Personal loans can be awarded in high amounts, depending on your credit score and borrowing history. In some cases, you could be awarded up to $50,000 or more. Of course, personal loans are naturally set up to be long-term loans—so while you may end up with smaller monthly payments, you’ll be paying more interest over the total life of the loan.

If you need a smaller influx of cash (somewhere between $100 to $1,500) and only want to borrow for a month or two, a personal loan from a bank may not be the right choice. Payday loans are a great option to pay for smaller emergency expenses or to temporarily cover recurring bills like rent, electric, car payments, and more.

Loan type

Borrowers with higher credit scores will win on this one, as they will likely qualify for a standard, unsecured loan. Borrowers with lower credit scores, however, may need to opt for a secured loan. That means a lending officer will require collateral in return (like your car title, or your house, in the case of a mortgage). Missing payments could put you in jeopardy of losing whatever you listed as collateral as a result.

Payday loans, on the other hand, are unsecured loans. That means a payday lender won’t require that you attach something of value to back up your loan—which means you get to keep your favorite things right at home where they belong, safe and sound.

Loan applications and processing time

While most banks and credit unions will offer an online application process for a personal loan, they don’t always give applicants the benefit of a quick decision. The review process alone can be anywhere between a day or two to a couple of weeks. If you’re waiting up to two weeks for a decision alone, it’s anyone’s guess as to when that money will actually appear in your account.

For those times where you need to count on a quick decision, payday loans are your best bet. Payday lenders offer approval within minutes, and can deliver funds in less than an hour after approval. Even better, payday lenders provide easy online applications and processing that be completed start to finish anywhere on the go—even from your phone!

Woman On Phone

What Can You Use A Payday Loan For?

Because payday loans are both fast and flexible, there are plenty of ways to use them. Here are some of the ways that Canadians across the country have used payday loans:

  • Covering emergency expenses, like car or home repairs
  • Emergency tech difficulties, such as replacing a broken laptop or a lost phone
  • Getting a little extra breathing room from one paycheque to the next
  • Paying monthly bills, such as rent, mortgage, electric, gas, internet, etc.
  • Consolidating other debts to pay them off in a short period of time
  • Financing an unexpected trip or vacation
  • Establishing a good lending history
  • Boosting credit scores with on-time loan payments

When it comes to how to use payday loans, the options are endless! After all, there are plenty of times where you may find yourself in need of a little additional cash (and, alas, without a fairy godmother to grant your wish).

Of course, no matter what you use a payday loan for, the best way to utilize short-term loans is to apply them to short-term expenses. Payday loans are an easy way to get access to funds quickly, but they are not designed to be long-term payment solutions. (Here’s where we tell you to not get in a cycle of paying your rent every month with a new payday loan!)

As with any loan, you’ll want to make sure that the borrowed amount and the payments are feasible for your income and your monthly budget. Whether it’s 30 days or 60 days in the future, make sure that your repayment plan sets you up for success without leading to more debt.

When used responsibly, taking out payday loans for one-time, unexpected expenses is a great way to boost your financial health. They can also help you learn key budgeting and borrowing skills to help you keep your wallet—and your bank account—in top shape.

Want to learn more about payday loans and how you can put your loan to good use? My Canada Payday is one of the top payday lenders in Canada, and we love partnering with first-time borrowers and seasoned pros alike.

Cash Advances: How They Work and How They Can Help

Let’s face it: not having cash on hand can be frustrating. Credit card bills, car payments, and rent schedules don’t always line up with our paycheques, leaving us strapped for cash at the last minute. We’ve all been there!

 

Add in the last-minute expenses like having to replace the brakes in your car, purchasing a new water heater, or—knock on wood—accidentally dropping your phone in the toilet, and you could easily find yourself in a bind.

 

Saving for emergencies is not as easy as it sounds. In fact, only 25 percent of Canadians have money set aside in a rainy day fund. When an emergency hits and your wallet is light, cash advances are a great way to get access to the funds you need,—especially if you need it quickly.

 

But what is a cash advance and how does it work? In the sections below, we’ll dive into all of the details of cash advances to help you make the best choice for you—and your wallet.

 

What is a Cash Advance and How Does it Work?

 

A cash advance is a short-term loan that has one sole purpose: to get you your money as quickly as possible. Short and sweet, right? Well, there are actually a few subtle differences in how you can get a cash advance (and how this type of loan works). There are two ways that you can get a cash advance:

Get a cash advance through your credit card

These days, most credit cards offer a cash advance option. This lets you borrow against your available credit to get access to funds quickly. If your credit card has a pin attached to it, you can simply go to an ATM and withdraw cash, just like you would with a debit card. If not, you’ll need to find a bank that offers cash advances through your network (Visa, Mastercard, Discover, or American Express).

 

Using a credit card for a cash advance can be a quick fix to an empty bank account, but there are a few disadvantages to consider before you start opening your wallet:

  • Interest rates
    Credit cards are notorious for high interest rates, and cash advances are no exception. The average credit card APR can be as high as 25 percent, and many cards tack on higher fees for cash advances.

    Of course, if you have high credit scores, your overall APR will likely be lower—but using a credit card for a cash advance isn’t exactly saving you money. While regular purchases don’t start accruing interest until your billing cycle ends, cash advances will start accruing interest immediately. Without a grace period, you’ll have to be prepared to start repaying that loan right away.

  • Extra fees
    Along with high interest rates, you’ll also need to pay a few fees. Every credit card has its own rules and regulations, so there are a couple of different ways you might see fees show up on your monthly bill.
  • Low withdrawal limits
    Even if you have thousands of dollars in available credit (yes, we’re dreaming of that day too), keep in mind that you won’t be able to take out the entirety of your spending limit. Most credit cards limit cash advances to a few hundred dollars—so if you need to cover more than the cost of a good steak dinner, you could be out of luck.

 

If you only need a couple hundred dollars—and you’re willing to put up with the extra fees and higher interest rates—using a credit card for a cash advance could be a good solution.

 

But what can you do if you don’t have a credit card, or if you’ve already maxed out your line of credit? And what if you need more than what your credit card will let you borrow? Luckily, there is a second option: payday lenders.

Get a cash advance through a payday lender

Payday lenders offer short-term loans that are borrowed against your next paycheque. In this scenario, your cash advance will need to be repaid when your next paycheque comes in (although some lenders will allow for longer-term loans). Similar to a credit card, taking out a cash advance with a payday lender lets you get money quick, bypassing the long wait times from traditional lenders, like banks or credit unions.

 

So what’s the difference between getting a cash advance from a payday lender instead of using your line of credit? Here are a few key reasons why using a payday lender might be a better option for you:

  • Online access
    Most payday lenders offer a completely online process. You can fill out an application and get approved on the same day, all while sitting in a coffee shop, waiting for an Uber, or even binge-watching your favorite show. Plus, being able to apply for cash advance loans online means you don’t have to deal with standing in line in a bank or at an ATM—or even worse, scheduling an appointment to speak with a lending officer.
  • 24/7 application and approval
    You can’t predict when you’ll need a quick influx of cash—it could happen at two o’clock in the afternoon or two o’clock in the afternoon. No matter what time of day or night (here’s looking at you, night owls), a cash advance loan through an online lender makes it easy to get the funds you need.

    The best short term loans in Canada will provide instant e-transfers to deliver funds. This means your money is immediately deposited into your account after approval, taking away the stress of constantly refreshing your banking app, wondering when your money will be available.

  • Larger borrowing limits
    Getting a cash advance through a payday lender means having access to larger loan amounts. Payday loans in Canada range from $100 to as much as $1,500, making it easier to cover larger expenses—like when you get a flat tire, or need help covering the rent.

 

If you have a steady, reliable source of income and can pay back your loan in a short period of time, getting a cash advance through a payday lender is a great option. This process lets you get cash fast without jumping through hoops—which is the last thing you’ll want to do when you’re strapped for cash!