When you need fast cash, a short-term loan in Canada might seem like the easiest solution. You can apply and get approved in minutes, even with bad credit. But before you sign on the dotted line, there are a few things you should know to make sure you’re getting a fair deal and not getting into more trouble than you bargained for.

This blog post will compile the most important things you need to know about payday loans in Canada.

Things You Need to Know About Short-Term and Payday Loans in Canada

How much can you borrow?

Most payday loans only allow you to borrow up to $1,500, while short-term loans can go up to $10,000, depending on the lender and your creditworthiness. However, just because you can borrow that much doesn’t mean you should. Only borrow what you need, and keep in mind that the more you borrow, the more interest and fees you’ll have to pay back.

What’s the interest rate?

Payday loans in Canada are usually capped at 60% per year, but that still works out to 15% for a two-week loan. These loans can have rates as high as 46.96%. That might not sound like a lot, but remember that it’s calculated on an annual basis.

Can you roll over the loan?

If you can’t repay the loan on the due date, some lenders will allow you to roll it over to the next payday or extend the repayment period. However, this will most likely come with an additional fee. Rolling over the loan can also put you in a cycle of debt, where you’re constantly paying fees and interest without ever paying down the principal.

What are the consequences of non-payment?

If you can’t repay the loan on the due date and don’t roll it over, you could face consequences like a penalty fee, interest charges, and even legal action. Your credit score could also be affected, which can make it harder to get loans in the future. Make sure you understand the consequences of non-payment before you take out the loan.

Conclusion:

Short-term loans in Canada can be a useful tool for getting fast cash when you’re in a bind, but they come with risks and costs that you should be aware of. Before you sign up for a loan, make sure you know how much you can borrow, and what the interest rate and fees are. By being informed and cautious, you can use payday loans in Canada wisely and avoid the cycle of debt that so many borrowers fall into.