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| What is a payday loan? Payday loans are relatively small, short-term, unsecured, consumer loans. Consumers can apply for payday loans through the Internet. The payday loans range from $100-$500 to start. If approved, the loan amount is then deposited into the applicant's checking or savings account. Payday loans are a way to avoid bouncing checks, pawning personal property, or borrowing money from family and friends. Consumers may also use payday loans to avoid late payment penalties and negative marks on credit ratings. Most financial institutions cannot or will not provide loans for small amounts (under $1,000.00) without collateral or credit checks. Many people have a periodic need for short-term financial assistance. When used responsibly, payday loans can provide valuable assistance and fulfill people’s short-term cash needs. Why do people use payday loans? An increasing number of consumers use payday loans to cover unexpected expenses or to bridge a short-term cash crunch between paydays without incurring revolving debt. A payday loan is a short-term financial management tool that can provide a sensible alternative to costly bounced checks fees, late payment charges and tarnished credit ratings. Financial institutions are making fortunes by charging Non-Sufficient Funds fees to their customers. If you have a couple of pre-authorized payments or post-dated cheques (one large one and several small ones) coming out of your account, but do not have enough money in your bank account to cover them all, the financial institution may clear the largest payment and then bounce the rest. They will charge you a huge NSF fee on each item. The NSF fees can range from $20 to $45. What are some ways to rebuild my credit? We are all faced with a fact of life: you need credit to get credit. If you have bad credit, no credit or have recently gone bankrupt, you should first establish or re-establish a good credit rating and change your credit profile before you apply for any kind of a loan or a mortgage. It is important to build a good credit history. If you do not have a credit file, it may take time to establish your first account. This problem affects young people beginning new careers as well as elder people who may never have used credit. It also affects divorced or widowed spouses who may have shared credit accounts that were reported only in their spouse's name. You can easily find out how your credit file looks like by checking with the two main credit bureaus of Canada: Equifax and Trans Union. Simply contact them and request a copy of your credit bureau file. Approximately 65% of all credit reports have some type of misleading or inaccurate negative information. Check your credit report once a year and have any inaccurate information reported and removed. |
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