Payday Loan Introductory Offers
There are many ways to entice people to do things that are not in their best interest – from peer pressure to high-end marketing pushes.
Recently a payday loan ad in a local paper caught our eye. To entice new clients to their store they offered to only charge 173.9% APR on a $300 14-day loan.
APR means – annual percentage rate.
Now by their standards 173.9% APR is a deal – usually, they charge 547.50% APR!
We appreciate good marketing as much as anyone – and the ad appeared to provide full disclosure. Understandably, the fact that the introductory loan was for 14 days as well as the 173.9% APR and 547.50% APR was buried in the small print.
In large print was an offer of a $300 Loan at a cost of $20 (for a first-time loan only).
We do understand that when most people take out their first payday loan they are desperate. And paying $20 to get $300 today might seem tempting. But the reality is, when the next payday comes around, they are going to have $320 less to pay their bills with – and they will be more likely to fall into the payday loan trap.
The dangers of Payday Loans
Many people in the Toronto area have gotten ‘hooked’ on payday loans and end up stressed and overwhelmed by their debts.
It is not just the payday loan (which is a serious problem on it own) it is also what happens to all the other debts when after paying for a payday loan there is not enough left of the paycheque to pay the rest of the debts and bills.
Payday loan Laws in Ontario
The Ontario government rules around payday loans do not allow roll-over loans – that is at the end of the loan period payday loan companies are not allowed to roll the outstanding balance into a new loan, or to give out a new loan until the original loan is paid.
Of course, this often means that people who are desperate for their payday loan fix will take out a new payday loan with a different company. We have seen clients with up to 14 separate payday loans!
Just imagine what it is like to owe 14 payday loans and be unable to repay them. Getting calls from 14 different collection agents plus all the other creditors who are not being paid – the stress is overwhelming.Contact David Sklar
Not Everyone Who Takes Out a Payday Loan Ends Up in Trouble
This is true – many people only use payday loans once or twice and do not end up in financial difficulties.
However, our almost daily contact with Toronto area residents who have ended up in serious trouble as a result of payday loans and other related debts gives us a clear picture of what can happen when someone gets trapped into using payday loans.
Breaking The Payday Loan Habit
Just as with other risky behaviors, your best bet is to never start.
But if you are caught in the payday loan trap – you have two basic ways out:
- Stop using payday loans and find a way to pay off your outstanding payday loans while also paying off your other debts. Check out this useful article on how to stop using payday loans.
- If you are too far in payday loan and other unsecured debt to ever be able to get out of debt on your own – contact a bankruptcy trustee to find out about the government-authorized programs that can help you get out of (be discharged from) payday loans and other qualified debts.
If Your Looking for Debt Relief David Sklar & Associates Can Help
If you live in Ontario and are overwhelmed with payday loans and other debts – speak to the experts at David Sklar & Associates, for a FREE consultation. Our caring, licensed professionals will review your finances in detail and discuss all of your options for debt relief.