Payday Loans Winnipeg
There are many people who seem to struggle under the supposed living wage to pay bills and stay on top of their debts. Because of this, it is important to know what it really means to borrow money. This can be done through credit cards, personal favors, or through different kinds of loans from banks or businesses.
Today we will be discussing payday loans and debt in Winnipeg; what they are and how they actually promote debt for most individuals instead of helping to put a stop to it.
What Are Payday Loans?
A payday loan is a loan of a certain amount of money, usually a few hundred dollars, that you then pay back with interest the next time you receive your paycheck. Unlike other loans, the interest rate of payday loans is very large — up to fifty dollars for only a few hundred dollars loaned.
This means that, over time, you could end up paying back close to twice as much as you borrowed, depending on how high the interest rate is and how long it takes you to pay it back. Because of this, it is very easy for a person to go into deep debt.
Why People Take Out Payday Loans
Payday loans in places like Winnipeg are usually an attractive option for people who have bills to pay that simply cannot wait. Our research states that credit card bills are the most common reason a person gets a payday loan in the Winnipeg area. However, most people either have all their bills to pay at once, or the bills are spread out over time according to the frequency of their paydays.
If bills are spread out, it is easy for a person who takes out a payday loan to become a victim of debt, because all their income is going toward paying off the loan instead of their new bills, making it necessary to either take out another loan or default on certain payments. Neither option is a good method for attempting to pay off debts or prevent new ones from emerging.
Are Payday Loans Worth It?
Payday loans, while considered a reputable way to get an advance on the money you earn, are very similar to scams, in that they are designed to cause you to continually need loans as you progressively go further into debt. These loans take advantage of the fact that you simply do not have the money you need right now, and take your only source of income as payment for the first loan you took out, making it necessary for you to take out more loans in order to stay on top of your bills and debts.
Despite being perfectly legal, payday loans are obviously a way for businesses to force individuals into debt that they can later collect by taking out liens on or repossessing your property. They could also be a cover for an actual scam, using payday loans to force unfair or illegal debts onto people who do not have the financial knowledge or ability to fight back when faced with such issues.
Conclusion
Be extremely wary of payday loans, especially during times you are financially vulnerable. There is very little reason to take out a payday loan that cannot be applied to a safer, less debt-accumulating method of getting money quickly.
It may even be better to simply be late on a few payments rather than take out a payday loan and risk your financial security. Take this into consideration if you have to make a choice of whether or not to get a payday loan in the future.