REASONS WHY THE PAYDAY LOAN INDUSTRY IS GROWING IN CANADA

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People are familiar with loans. These are what you apply for in a bank to help pay for something. However, a particular type of loan has certain advantages that are not included in the usual loans called payday loans.

What are payday loans? Payday loans are the alternative way for people to get financial help. They are short-term loans that let other people borrow within a certain amount of money. Similar to the usual loans, the payday loans will need to be paid back within a timeframe with additional interest. 

This industry in Canada is growing. There is a positive side to this growth, but there are also negative implications. Try to understand the reasons behind the flourishing payday loan industry in Canada. 

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Financial Hardships

This situation is not only centered in Canada. Everyone and anyone around the world can be at risk of these financial hardships. Despite having a job, unfortunately for some people, their wages are not enough to survive the cost of living. 

Usually, a payday loan is used for emergencies. People would take loans for certain payments like bills, mortgages, debts, and other abrupt expenses. However, it is even used for basic expenses like rent payments and utility bills. Due to these situations, people have relied on payday loans to make ends meet. 

Unexpected Events

There are also instances where unexpected events occur, and people would need quick money. Aside from the financial struggles that people are experiencing, additional challenges can still make way into their lives. Families would go into a situation wherein they will encounter accidents or illness where they will need to be hospitalized or require medical treatment.  There will also be unfortunate events where they will experience property damage and need money to repair it immediately. During these hard times, payday loans have become people’s go-to resort when they experience these situations. This is true, especially in some countries in North America. 

Economic Volatility

Another reason why this industry is growing is because of social and political issues. The lives of the people are affected by the status of the country’s economy. The pandemic has proven that these types of incidents and problems have a negative impact on society. The unstable markets, sudden unemployment, and drastic lifestyle change have caused financial problems, especially for those who are part of the lower socioeconomic class. There have been many reports showing that Canadians do not have reliable savings to pay for sudden expenses and emergencies.  Economic volatility just proves the need for this industry. It is also a huge contributor to why the payday loan industry is growing. 

Fast

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One of the perks of taking a payday loan is how fast the process is. This is useful for people in North America, where living expenses can sometimes be too much. There are Canadian payday loan companies that are available the whole day for the entire week. They also have online applications and transactions that make it even faster. 

They are also fast in terms of money lending. One way to look at this is how it immediately solve the financial problem (even if it might be temporary). 

For example, it will take time with bank loans before you get money from them; usually, it will take days. There is also no guarantee if you will be granted a loan. Unlike bank loans, you will be able to receive payday loans within the day or the next.  

Simple

The simplicity of the system causes the fast process of this type of loan. There are fewer requirements needed to apply for one. With this policy, people will get cash much more conveniently.

Most payday lenders will only require loaners to meet these simple criteria:

  • Must be 18 years old or above
  • A Canadian citizen
  • Have a regular job or source of income
  • Have an open bank account
  • Have a contact number, email, and home address

If the loaner meets the criteria, they can fill in an application form and wait for a while to get approved, then they can sign the loan agreement and receive the funds right after.

Reliable 

This industry’s importance reflects how it is integral in helping the community, especially those who are financially struggling. These people need quick money to solve problems. They can easily rely upon payday loans to provide them with funds. Most of those who use payday loans have no one to turn to. Some can’t rely on their other relatives and friends or are embarrassed to ask for help. With payday loans, they avoid embarrassment.  Usually, payday loan lenders do not require an explanation of why you need the money, unlike bank loans. No explanation will also mean no judgments. 

Accessible

Another advantage of this type of loan is that it is accessible to those who need it. It does not matter if you have bad credit. Payday lenders will still grant you a loan. Although, they will need to assess whether you will be able to pay them. Payday loans are unsecured loans meaning they do not hold any collateral from you. Keep in mind that they have the right to refuse to accept applications that they think might be risky because of the lack of collateral.

However, rest assured that poor credit history would not be a huge factor when it comes to getting a payday loan. 9 out of 10 loaners with lousy credit or nonexistent one gets approved.  The payday loans industry is growing mainly because of the situation of the residents living there. Plus, the advantages that this industry provides to the citizen of Canada. 

Naturally, the industry will keep on growing if there is a high demand for it. People require payday loans to pay bills, rent, and debts. They also need money for other emergencies and significant expenses like medical treatments and the likes.  

Aside from the people’s needs, the industry is also rising because of the advantages that these people can get out of it. People rely heavily on this industry because of the quick money they get from it. The process is fast and straightforward. It is convenient for them. 

A lot would argue that the payday loan industry is terrible and criminal. People need to understand that these loans are not the permanent fix to their financial challenges. However, the world needs to realize that the lowest sector of society will have no one to turn to without it. 

The views/opinions expressed in these comments are solely those of the author and do not represent those of Island Echo. House rules on commenting must be followed at all times.
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