Why Payday Loans in Alberta Could Be Costing You More

Payday loans are short-term, high-interest loans that are usually repaid by the time of the borrower’s next paycheck. Candidates usually takes payday loans when they face immediate medical bill or any emergency expenses. People living in Alberta use payday loans to compensate for urgent expenses, but payday loans are most expensive borrowing options as these have to repaid in short time, have high interest rates and come with large late payment fee.

Payday Loans in Alberta

In Alberta, payday loans are expensive, short-term loans that let you borrow up to 50% of your income and usually have a 62-day payback period. The idea that the loan will be returned on your later payday gives rise to the term “payday loan.” The cost of borrowing will go up if you don’t pay the lender on time because they will impose late fees and interest.

Payday Loan Applying Procedure

In Alberta, you can apply for payday loan by filling application online or you through payday loan center at your nearest location. Certificate of regular income of previous three months, proof of permanent address such as utility bill and a proof of chequing account are the documents required to apply for payday loan.

You must fill out a form authorizing the lender to take pre-authorized debit payments out of your bank account, or you may send a postdated check, before you can get the money. While in-store applications may offer cash or prepaid card options, online payday loan applications will result in a direct deposit to your bank account.

Payday Loan Cost

Payday loans can be a costly method of borrowing funds. In Alberta, a lender can charge a maximum of $15 for a $100 payday loan, but extra fees can be added by the lender if the loan is not paid back on time. For example, if you urgently need to borrow $300, the costs can quickly add up. Borrowing $300 for a payday loan would entail a $45 fixed fee for a 14-day period. In comparison, borrowing $300 with a 23% interest rate on a credit card would only result in a cost of $6.15 during the same time frame.

Payday Loan Regulations

In Alberta there are specific rules and regulations to protect borrowers from any bad situation. In this regard the rights of lenders and borrowers are clearly stated. It is crucial to have knowledge about what lenders can do and what they can’t. In Alberta lenders cannot perform the following activities:

  • Lenders cannot provide a payday loan that exceeds 50% of the borrower’s net income per loan.
  • Lenders cannot offer rollover loans to the borrowers.
  • Before taking the first loan back, lenders cannot give another loan.
  • Lenders cannot charge more than $25 for a bounced cheque or dishonored pre-authorized payment.
  • Lenders cannot extend a loan agreement beyond the original term.

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Conclusion

Payday loans are expensive option for the people of Alberta because of large interest rates, late repayment fee. Usually people try to return loans at time but somehow if anyone misses the loan repayment he/she falls in debt cycle as loan get increased and increased due to late payment fee and every month new expenses require extra credit. This article states all the details about Payday loans in Alberta, eligibility criteria, required documents and amount of loan.

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