How payday lenders exploit the poor

A payday loan

A payday loan

A payday loan may seem wise in a scenario where you have two months late on your hydro account and your next paycheck will not be enough to fill what you owe on your late accounts, let alone your current accounts. Having said that, once you start making advances on your salary, you are likely to get into debt even more deeply. Lenders offering these advances are taking advantage of the difficult circumstances of low-income families and individuals.

The New York Times recently published an article detailing what happens when an individual is not able to pay back his payday advance before the due date. He explains that these advances are presented as a temporary solution allowing an individual to meet his financial obligations, but that these often lead to a vicious circle of indebtedness. That is to say that each new advance generates another, because once it is paid, there is not enough of the borrower’s salary to cover his expenses, and so-and-so. Since a payday advance usually has to be paid in full when you receive your paycheque, and the advances include a share of interest, each new cycle only increases your indebtedness. At Québec, we want to break the cycle of debt so you can regain control of your debt and pay your bills when they are due. The best way for some to meet this goal is to get an Installment Loan.

The New York Times article points out that about 50% of all initial payday loans are followed by a succession of at least 10 additional advances. It is unreasonable to think that someone who needs such a loan is able to repay it in a single payment, which is why the author of the article is led to conclude that this industry is dependent on these individuals and families who are caught in this situation of burst loans. You can break the vicious circle because Loans Quebec offers installment loans. This type of loan does not require you to repay all you owe in a single payment in the very short term. The majority of our personal installment loans have a slightly more reasonable term, allowing you up to a year to repay your loan,

Once in a while, your financial situation may become a little more difficult to manage. In these cases, it is advisable to seek help. As with all important decisions, however, it is important to be wary of this request: a payday advance will only serve to further you into debt. Consider a personal loan at Québec. You will be able to choose a loan with a payment itinerary allowing you to regain control of your finances.

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