05 Jul Alberta Payday Loans
Many people are simply unaware of how advanced the payday lending industry has gotten. Often, people think that you still have to wait in long lineups and bring tons of documents to prove your employment. Although some Alberta payday loan shops still ask for these documents, online vendors do not. Also, the allowed borrowing amount has increased from $700 to $1,500; which many people do not know. It is certain that people still get bank loans because they do not know that they can borrow much more from payday lenders these days.
Another misconception is that payday lenders charge a criminal rate of interest. The Canadian government has implemented an interest rate cap that is 21%. This means that the highest rate a lender can charge you in Canada is $21 per $100 borrowed. If you’re ever charged more than that you are victim to a criminal operation. Some credit cards come with the same interest rates as payday loans but the reason payday loans are expensive is because there is a high rate of risk associated with lending money unsecured. A payday loan is an unsecured loan that comes with no guarantee of repayment. The risk is reflected in the cost of a loan. However, the costs are proportionate and thus not criminal.
Another reason that people still aren’t getting payday loans is that they were declined from their local banks. However, just because your bank says ‘no’ doesn’t mean you won’t qualify for a payday loan. Often, payday lenders don’t perform credit checks. Other lenders accept credit scores as low as 200.
It seems as though people are still getting bank issued loans due to a lack of knowledge. The government refuses to shed light on the industry because they do not want people to stray from bank loans. The best way they know how to discourage use is to paint an ugly picture of payday lenders.