Why Are Payday Loans Interest Rates So Expensive?
Canada.ca, approximately 2 million Canadians apply for payday loans each year. Online email money transfer payday loans in Canada with no credit check is a very comfortable option for borrowers looking to meet short-term expenses.
There are a lot of Canadians who depend on paychecks to paychecks. So they are not able to bear any extra expenses as their car got damaged, unexpected bills like medical bills, even electricity bills for home repairs.
This is one of the main reasons why they eventually have to resort to payday loans to come out of those expenses. One of the main reasons for this is that even with a low credit score; they are left with no other option.
This is the time when online payday loans become stronger to help them all, regardless of their credit score. And so these loans are a bit expensive. If you also need a loan then you can go ahead with these loans and fix the unforeseen problems of your troubled expenses.
Yes, there are high-interest rates that you will have to pay while repaying the loan. But on the other hand, it will help you build your credit score in the long run so that your financial reputation can be the best in the eyes of society.
Let us try to know more about the payday loan, but before that, it is very important to understand everything about what it is.
What are payday loans?
Payday loans are for a short period of time which can help you manage your expenses that you have met unexpectedly. By using these types of loans, you can eliminate your expenses which have become worse for you.
One of the best things you can do is get a loan directly into your checking account, even if it takes a short amount of time. Most borrowers who have never applied for a loan need not worry about any paperwork while applying for funds.
They sometimes get easily trapped to bear the high-interest rates and fees while applying through traditional banks. So it is most important to know where you are applying for the loan, make sure the lenders are reputable.
How do payday loans work for you?
Once you are guaranteed approval loans through a short process of loan application your loan is deposited directly into your checking account. The process of the application form is very simple which you have to face once it is online.
Once you complete the loan application process with less time. You then get a congratulatory notification; it takes you straight to the zodiac selection category. Once here, you can find the option to choose an amount from $100 to $5000.
You can select the amount and click on submit button which is a short distance away. This is done now; you can check your amount in your checking account within 15 to 20 minutes. Money will definitely come into your account.
It’s time to know now shocking reasons why the cost is high of payday loans:
Here is one of the examples of payday loans; A borrower applies for a payday loan with a loan amount of $400. Because he wants to get his car repaired and the lender charges a fee that is $60, what should the APR be?
We’ll go step by step:
You must add up all charges with interest charges to arrive at the total fee:
- Total Fee (Provided) = $60
You can also divide the total borrowed amount by:
- $60 / $400 = 0.15
You can also multiply the answer by 365 days:
- 0.15 x 365 = 54.75
You can divide the answer by the term of the loan in days:
- 54.75 / 14 days = 3.91
You can add a percentage sign by moving the decimal point two places to the right:
- Your answer on the loan will be 391% APR
Important conditions to notice:
- Funded Amount: The total amount to be credited to the borrower.
- Finance Charges Involved: The cost of a dollar amount can also be represented in interest rates.
- Loan Tenure: How long will it take you for the full repayment of your loan?
What are the requirements for payday loans?
If you are not applying through a traditional lender then you will need some basic requirements to make a deposit. This is because, for those borrowers who are already in financial trouble, it is really difficult to arrange the demanded requirements.
But while applying online, here are some basic requirements that you must have while applying for payday loans on weekends also.
You can see what you need:
- Bank account number.
- Address proof.
- Contact number.
- The minimum age is 18+.
These are some of the basic conditions that you need to fulfill in order to apply for the loan and get approval on the same day. In fact, you will definitely experience something different from the banks and street lenders who keep on offering you loans.
Conclusion
It’s acceptable that payday loans come with high-interest rates, but you can get a loan under any circumstances, you are. Once you get the money you can improve your credit score by making timely payments.
Moreover, these loans are free from all the complications that are usually seen in traditional banks. Even after arranging the documents and going directly to the banks, there is no guarantee that the loan will be approved.
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Jake is in the financial industry from past 10 years. Due to his long experience and deep knowledge on financial relationships, he is serving on various big name institutions. He is appointed as an underwriter, Director of Business Development and also Media Managing Partner.
