You may have seen some of the Payday Loan companies scattered around your neighborhood. There are usually a few in every community and they are designed to make it easier for cash-strapped employees to borrow against their future pay cheques (another name for a Payday Loan is a cash advance). These are small, short-term unsecured loans that are tied to your pay cheque. The Pay Day Loan store advances you some funds against your next pay cheque. Once you get paid you go in and pay back the loan, as well as a chunk of interest.
The big problem with most Pay Day loans is they usually turn out to be anything but low-interest OR short-term. They are the loan of last resort (where we go when all other loan sources, such as banks, friends and family, have turned us down).
Once caught in the web of Pay Day loan repayments, a borrower will often find themselves heading to a second or a third Pay Day loan store to borrow funds to cover the growing debt on the first Pay Day loan – with often disastrous financial results.
Payday Loans are the worst form of revolving credit and are hopelessly unaffordable for most people. The best way to deal with a Pay Day loan is not to use one at all.
Luckily, there is hope thanks to the Bankruptcy and Insolvency Act. If you’re already caught up in a frustrating Pay Day loan cycle, a Licensed Insolvency Trustee can help you put a stop to the nightmare once and for all.