All payday loans borrower have their own reasons for availing of this non-traditional credit facility. Just as you have different justifications for finding yourself in debt with mainstream credit companies, so do these borrowers have their rationalizations for securing short-term loans at 15-30% interest rates for a two-week period. What then are the most commonly given answers?
Reasons for Borrowing Payday Loans
The most frequently given reason is the faster release of the loaned money, which bypassed the long credit investigation of credit companies. This is very convenient when one finds himself in a tight monetary situation such as medical emergencies or educational needs. As the money lending companies specializing in these interim loans are open even on evenings and weekends, there is no need to wait for the next banking or working day. This is most opportune when your needs fall on these periods and you need the money fast. Other reasons for convenience include the fact that you can apply via the Internet and through phone, which virtually eliminates the scourges of modern life - standing in long lines and filling up a sheaf of forms with equally bulky documentary requirements.
Since Canadian payday loans companies do not conduct strict credit investigations and often require no bank accounts, even those with poor credit ratings or those who have declared bankruptcy can take out a loan. For these people, this alternative credit facility can be a last resort to get them out of financial chaos. Other reasons include the convenient location and the check cashing feature of the companies, but basically the ease of applying for and the fast release of the payday loans are the backbone of this fast-growing industry in Canada.
Frequency of Use
Depending on your need, you can avail of payday loans only once in your lifetime or as much as twice a month. If you are the former case, then it is good for you. One can safely assume that either you have control over your finances, or you have good standing with mainstream credit facilities, among other assumptions. If you are the latter, many hypotheses can be made about you. You have been unable to make ends meet with your paycheck after deducting your loans; you have availed of the rollover feature of payday loans; you have continually encountered emergencies the whole year for which you had no rainy day funds; and at worst, you are going down bankruptcy hell again.
Surveys have shown that almost half of borrowers avail of the loans less than once per year. This non-traditional credit facility still remains an alternative, especially when bad publicity like usurious rates and unfair collection practices reach the minds of potential borrowers even before they visit the companies' sites. Others avail of the short-term loans one to times a year, which is still good news for the companies. But what is even better news is the fact that many people still secure these quick fix loans more than once a month. This would mean that many Canadians have virtually pawned their paychecks!
However, if borrowers are truly committed to getting themselves out of debt, then there are many ways to pay them. Saving for rainy days and supplementing existing income are good tips towards this end.
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