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If you are worried that you may not have easy access to loans and money because of your poor credit history, then the good news is that you have the option to go for Payday loans. Because of the high fee and high-interest rates associated with payday loans, they have become an extremely popular and sometimes profitable business opportunity for lenders. They are easily available through small companies, offices, banks, and other financial institutions. A lot of companies have also started giving payday loans online without any documentation. If you have a valid checking account, then browse around here ‘I would not get a payday loan near me’ is not a cause of concern for you anymore.

Understanding a Payday loan

A payday loan is an ultra-short-term loan that is usually given for any period less than 1 year and is usually given to people with a bad credit score. This is because people who have a good credit score would rather go for cheaper alternatives like credit cards or secured loans. Payday loans are very cost heavy for a borrower and are associated with a high risk of default as well. 

The amount of money that is given as a payday loan is determined by various factors such as the income level of the borrower, checking account balance, reputation, and of course, the credit score. The time taken in disbursing a payday loan is also not much because of the minimal documentation required. Thus, it is one of the quickest ways (though not the best) to get money for an immediate financial need or crisis. 

The wide reach of payday loans

The payday loan industry is not very regulated, and thus the guidelines to be followed by the lenders are very simple and comfortable. This is a big incentive for the lenders to offer payday loans because unless there is a default, they end up making a lot of money in a very short period. As a result, you will find a number of lenders online and in your neighborhood who are willing to give these loans, and easy payday loans near me is not a problem at all. 

Due to the ease of availability of these loans, people with a bad credit score have been majorly incentivized. People do not need to bother about working on improving their credit score anymore, and can easily approach any of the payday loan lenders to get some quick money and overcome their financial instability. This exercise has become habit-forming, and this can be a cause of distress for people in the long run.  

Banks or smaller companies?

Earlier, only small financial companies were in the business of giving payday loans, but now even banks have ventured into this space. Some people misconstrue the payday loans given by banks to be safer and more reliable, just because earlier banks used to provide loans only after all due checks were done and only to people with a good credit score. 

It is essential to understand that payday loans taken by banks can be worse than those taken from smaller companies. This is because the borrower’s checking account is with the bank, and this gives the bank control over the borrower’s transactions. They can apply restrictions and limits on the withdrawal of funds, and can sometimes even automatically withdraw money from the borrowers account in case of a default. Thus, borrowing from a smaller company gives a borrower more control over his cash flow and money in hand. 

On the contrary, smaller companies and offices do not follow as many guidelines and regulations as banks do. As a result, they can charge any amount of upfront fee and interest rate from the borrower, and can also set their own rules of loan disbursal. A bank, on the other hand, is a more stable financial institution and is regulated by a Central Bank that monitors all its transactions. Thus, it is not as easy for banks to charge exorbitantly to the borrowers. 

Conclusion

Though payday loans are readily available nowadays both online as well as brick and mortar institutions, they should not be considered as an easy alternative to safer and more feasible avenues of having money. Proper financial planning and regular small savings can also go a long way in not having the need to borrow and not getting trapped in the cycle of borrowing and re-borrowing.

Not all loans need a credit check. In fact, many lenders provide no credit check loans in Canada.

Payday lenders provide loans without the need to assess your creditworthiness. This means that you can apply for the loan even you have a bad credit history, has an existing loan, or don’t even have a credit score yet.

What is a credit check?

Before a lender approves a loan, they usually do a credit check. Your credit history is recorded by major credit-reporting agencies, Equifax Canada and TransUnion Canada. Lenders can get your credit history from them.

These agencies compute your credit score. To calculate your score, they need the amount of your debt, payment history, and the duration of using credit.

Although credit check is very important to establish your credit profile, payday loans don’t need it. You can get approved in the short-term loan without worrying about your credit score.

How to qualify for loans without a credit check?

Lenders in Canada can provide loans of up to $1, 500. It is called payday loans or unsecured loans because you don’t need collateral like a car, house, or pricey possession to get approved.

It is easy and fast to get this type of loan because it only takes some minutes to finish the application online. You only need a few requirements like your bank information, employment, and personal details.

Most lenders only ask for these proofs:

  • You must be a Canadian resident.
  • You are above 18 years of age.
  • Proof of employment.
  • Bank account information.

How long should you wait to get approved?

As mentioned, lenders provide quick cash. You can receive it within 24 to 48 hours.

They deposit the money into your bank account. In some cases, they can hand you the money or deposit in your prepaid card.

When you take the loan, you sign an agreement that summarizes the total of your loan that includes fees and charges and the date that you should pay. It’s important that you fully understand the agreement to avoid misunderstanding that can mess up your finances.

The cost of loans with no credit check

You may have heard that payday loans are an expensive type of loan. That is certainly true. It’s because the loan comes up with huge interest and fees that are higher than credit cards and other personal loans.

The annual percentage rate is 400 percent. For every $100, you pay between $15 and $30 for the charges and interest.

Paying your loan is not the only issue here. For every credit, you need to pay a $5 administration fee.

The high interest and fees make it more difficult for borrowers to return the total cost of the loan at the right time. Usually, they default or go on a rollover. In some cases, the loans can trap them into a debt cycle.

Consequences of not paying your loan on time:

When you don’t pay your loan at the right time, you’ll likely incur big interest and fees.

  • The lender can connect with your family, friends, and employer in an attempt to collect the money you owe them.
  • They will charge you big time for the money you owe.
  • Your bank may charge you an overdraft fee if your account reaches zero.
  • Your loan will earn interest and charges continuously.
  • The lender may sell the loan to a collection agency. When this happens, it can reflect in your credit report and affect your credit history.
  • The lender can file a legal case against you for not paying your financial obligations.
  • The lender can seize your properties.

Although no credit check lenders provide you quick cash to solve your financial woes, you should think twice before getting one. It is easy to acquire money but the hard part comes when you need to pay it.

You may consider other options before applying. There are other alternatives that don’t cost that much.

You can ask family and friends to lend you without interest.  Keep in mind that you must be careful when borrowing because it often ruins relationships when you are unable to pay on time.

You may also opt to ask your employer for a cash advance. It is safer than other options because you can even request them to deduct it to your paycheck on an installment basis.