The payday loan business is very lucrative. The companies that are involved in this market benefit from the excessive interest rates and fees they charge for their products, and it’s not just the borrower who suffers. Payday loan companies have indeed marginalized the old private loan companies, which, often governed by families, charged fair rates and reasonable terms.
In many ways, payday loans are very profitable. If you quickly need a loan, payday loan companies do a great job when it comes to getting you cash.
Costs for consumers are excessive, even abusive, but it is not the only problem. It’s so easy to qualify for payday loans as traditional, local and private lenders have a hard time staying on the surface. You see, because small private lending houses charge much lower fees and rates, they tend to get more information before funding a candidate. This means that approval will not be as easy or as fast (though, overall, it’s a relatively quick procedure) as approval for a payday loan. However, by borrowing from a private lender instead of a payday lending institution, you’ll get better rates (something like 10% of what payday loan companies charge) and a nice feeling that you’re supporting them. local businesses.
The rise of payday loan companies threatens the market for private lenders, and this is not good news for consumers. A world in which small or microloans come with fares and fees that far exceed the loan amount does not seem to be an ideal world, is it? Let’s see what are the alternatives to payday loans:
1. Private Lenders
Private lenders are usually made up of local businesses. They represent a dispersed market across Canada. Many of them offer secured loans as well as unsecured loans. They can provide loans against a property, vehicle, or similar asset at reasonable rates.
2. Borrow from a friend or family member
Borrowing from a friend or family member is not always easy, but sometimes it’s a necessity. Given the current market uncertainty and the high costs typically associated with smaller loans, this is an option that should not be discounted.
3. Have you tried to apply to your bank?
Banks do not always get along with unsecured loans, however, if you need money to make a purchase, the bank could advance you the money. In this case, the loan will be guaranteed against the purchase you make (for example, a car or a snowmobile).
4. Do you have some home equity?
If you have some home equity, it will be much easier to find financing. You can probably get a line of credit or a second mortgage to meet your monetary requirements. You can also refinance your current mortgage to get easy access to the amount of money you need.
5. Do not necessarily opt for a loan
This is an option that many neglects. Alternatives to borrowing include: getting extra hours of work, finding extra work, requesting an advance on your payment to your employer, liquidating things you do not need … you have a lot of options. Do not exclude them!
Do you need a helping hand to balance things out?
Contact a financing specialist at Prêts Québec for advice and information. We will help you make the right decisions.