Edmonton payday loans

Should You Get Payday Loans in Edmonton?

Are you an Edmontonian looking for payday loans? Edmonton has many options when it comes to getting payday loans, but there might be other solutions that are better for your financial wellbeing. Even though payday loans with no credit check might seem like your only option at the moment, you might be surprised at the different financial products that are available to help you get the money you need now, while building credit for the future. 

Here’s what you need to know about payday loans in Edmonton and alternatives that might work for you. 

What is a payday loan?

A payday loan is a short term, high interest loan that is due on the borrower’s next payday. Every province has different regulations but typically payday loans need to be repaid, including fees, in one payment. If you cannot repay the loan by the next payday, you typically incur an additional charge, which can quickly balloon the cost of your loan and make it difficult to repay.

Pros

Even though payday loans are expensive and involve a huge risk for the borrower, they’re still a popular financial product. Payday loans in Edmonton are easy to find. Why do people gravitate toward payday loans?

  • No credit check: Getting payday loans in Edmonton requires no credit check since the loan is secured with the funds from your next paycheque. For borrowers with bad credit or no credit, payday loans with no credit check mean they actually have a chance at getting the money they need when they would otherwise be turned away by traditional financial institutions. 
  • Quick approval: If you need money in a hurry you might not have enough time for a more traditional loan to be funded. Payday loans can be funded in minutes. 

Sometimes these advantages to payday loans can be compelling, especially to people who feel they are in a financial bind. Since there aren’t many loans with no credit check, people with bad credit or no credit often feel compelled to get a payday loan. If this is your circumstance, you shouldn’t feel any shame in making an informed financial decision that is right for you. However, make sure you review the alternatives to payday loans in Edmonton to see if you can find a different solution. 

Cons

There are a lot of disadvantages to taking out payday loans that you should consider before going this route. They are one of the riskiest financial products available today. Here are some cons to consider before taking out a payday loan in Edmonton:

  • High interest rate: Payday loans in some areas can have an APR as high as 400%. In comparison, a typical credit card has an APR of around 12% to 30%. 
  • Short repayment term: Since you need to repay your loan by your next payday, the term is quite short. This could make it difficult to get the funds together, especially if a new expense arises.
  • Difficult to repay: The combination of a high interest rate coupled with a short repayment term can make payday loans can be incredibly difficult to repay, causing your debt to grow to levels that can be unmanageable for some borrowers. 

Do payday loans in Edmonton have different rules?

In May 2016 the Alberta government passed new legislation that sets tighter limits around payday loans in Edmonton and across the province. Here are some of the Alberta rules on payday loans:

  • Maximum borrowing rate of $15 for every $100.
  • Companies cannot offer a loan when customers already have one outstanding with that lender.
  • Payday loans in Edmonton and across the province must have a minimum term of 42 days. 
  • The term of the loan cannot be more than 62 days.
  • The maximum loan amount is $1,500. 

Alternatives to payday loans in Edmonton

If you’re looking for a payday loan in Edmonton with no credit check, it could be helpful to consider these alternative options first. Even though you might feel there is no other solution to the financial stress you are facing, you could be surprised to learn that other financial products do exist which could help you.

1. Lady Loans

Lady Loans offers loans up to $7,500 to women, who must take a sisterhood pledge and join the Lady Loans community while repaying their loan. The Lady Loans community offers financial education and support to help women who are burdened by their finances. You can apply for a consultation online before moving forward with an in person consult. With a Lady Loan, you could qualify for a lower interest rate and longer term than a payday loan, making the loan easier to repay. Plus, the Lady Loans sisterhood is aimed at giving you the resources to thrive financially.

2. Credit builder loan

A credit builder loan is a type of financial product that works by lending you money that is held for you by the lender. You build your credit by making on time, monthly payments that are reported to the credit reporting agencies. Once you’ve repaid the loan, you get the balance back. While this loan can’t help you get money immediately before payday, it can help you rebuild your credit so that you qualify for a traditional alternative to a payday loan in the future.

3. 0% APR credit card

One savvy financial strategy is to get a 0% APR credit card to help with immediate expenses. With a 0% APR credit card, you won’t owe any interest you make on purchases during the introductory period. If you’re able to repay your purchases before the promotional rate expires, it’s essentially like a free loan. However, the interest rate typically jumps significantly after the promotional period expires and you’ll likely owe interest on purchases from the day they were made, not the day the promotional rate expired. That’s why you should commit to a solid payment plan before you make any purchases with a 0% APR credit card so that you don’t run into trouble later.

Keep in mind, you generally need a good credit score to qualify for the 0% introductory rate, so this option might not be viable if you have bad credit or no credit.

4. Pawn loan

The way a pawn loan works is that a pawnbroker will lend you money using one of your valuables as collateral. They’ll appraise your item and lend you a percentage of its worth. The pawnbroker holds the item in a secure location while you continue to make payments on your loan. When you repay the loan, you get your item back. If you stop making payments, the pawnbroker will sell your item to recover their cost. 

Similar to payday loans in Edmonton, pawn loans require no credit check. One advantage pawn loans have over payday loans is that the lender won’t take funds from your paycheque if you fail to pay the loan. Pawn loans are a very traditional way of getting a loan with no credit check, but remember, you will be paying a premium in interest when you get a pawn loan. They are one of the most expensive ways to borrow money. 

5. Earn money in the gig economy

If you need some extra cash to help get you through to payday, one option is to consider finding temporary work in the gig economy. Companies such as SkipTheDishes, Uber and AirBnB all offer ways to make some extra money on the side during non-traditional work hours. If you can avoid borrowing money, or reduce the amount of money you have to borrow, your personal financial situation will be much healthier in the long run. Even though it can be hard to balance your work, personal and family responsibilities with additional work in the gig economy, your hard work will pay off with a more stable financial situation.

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