You think that if you could just have a bit of cash now you could make it to the next pay day. And where can you get that cash?
Most people find ads on the internet or see the places when they are passing by them. You all know the names of the pay day loan companies (I won’t mention them here); they all have “Money” or “Cash” or “Loan” in their names, so all of their names sound very familiar.
Here’s how they work: you sign paperwork that says you will borrow from them an amount of money to be paid back at your next pay date. They charge interest, and a fee for the borrowing and for the processing of the money.
Most of these places charge so many fees that the repayment amount is usually much greater than the amount borrowed. And they are very happy to let you borrow the same amount or a greater amount the next time in order to make payments because you don’t have the money once you are paying them back. Under Ontario law they can’t keep turning over your loan, so in practice you borrow from Place #1, then next week get a loan from Place #2 to repay them, then borrow from Place #3 to repay Place #2. Then it’s back to Place #1 to repay Place #2, and the cycle continues.
And it keeps on going – borrow, repay, borrow, repay – always in increasing amounts.
The Ontario government passed legislation in 2009 that in effect says you do not have to pay more than $21 per $100 borrowed. Previously the charges would have meant payments of anywhere from $30 to $60 on $100 borrowed.
But think about this: $21 paid back (plus the principal of $100) on $100 borrowed is like paying 21%. And if you don’t pay them back immediately there will be late charges and other processing charges so the actual rate could be still much higher than 21%. And that 21% is an “annual” rate; if you pay the loan back in two weeks, the annual interest rate is obviously significantly higher.
Can you afford to pay that much for a short term loan? Will you be able from your next pay cheque be able to pay them back plus the extra amount they need (remember the $21 per $100 borrowed) plus the amounts you need to pay to other places from that next pay cheque?
If not, maybe borrowing from them is not the answer to your money problems. Maybe calling or emailing us to set up a free consultation to talk about more options is the answer. Yes, maybe the answer will be a bankruptcy, but it could be a consumer proposal or a Debt Management Plan.
Instead of getting on the merry-go-round of payday loans, call us today at 310-PLAN, and we will help you develop a solution to your money problems, and give you a fresh start.
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