When you have a low credit rating, it is difficult, if not impossible, to obtain a loan from traditional financial institutions. Payday loans without a credit check can borrow up to $ 1,500 for the short term and meet urgent cash needs.
A limited sum
The payday loan consists of borrowing an amount proportional to his salary, up to a limit of $ 1,000, or even $ 1,500 depending on the organization, and repayable during the next payday, generally by a pre-authorized payment on the account or a check . postdated.
Short term loan
Payday loans, as the name suggests, are very short term loans repayable on the next payday. They are therefore not suitable for people who need a loan to repay in several weeks or even months. In Quebec, this type of loan is renewable.
A loan without investigation
Payday loans are not granted or refused based on the credit rating of the applicant, the lender not taking them into account when making its decision. Indeed, when they study the file, the financial establishments offering this type of loan endeavor to verify that the borrower has a stable situation, is able to repay the loan and is not in a situation of over-indebtedness: in particular, they check on account statements that revenues are regularly received, loans in progress and the possible presence of rejected payments or another short-term loan. In the latter two cases, the request is generally rejected.
Because they are granted regardless of the applicant’s credit score, payday loans can be used by people who do not have a credit card.
A simple and fast process
To obtain this type of loan, the procedure is usually done online. All you have to do is fill out a form and provide the requested documents (two pieces of identification, sample check, last pay stub, bank statements and proof of residence) so that the organization can study the file.
Most of the time, an answer as to the admissibility of the file is obtained within the working hour which follows the reception of the documents, and in any case within 24 working hours. The amount granted is paid by direct deposit to the applicant’s account or to a prepaid card.
A solution to reserve in emergencies
As it is a more expensive solution than a conventional loan or an ordinary line of credit, the payday loan is to be reserved for emergency cases such as the payment of bills before interruption of service, repair of ” a vehicle used for going to work or unsupported medical expenses. By way of comparison, the annual interest rate on store cards varies between 25% and 29% while that of a payday loan can reach up to 35%, the maximum rate retained by case law in Quebec.
Even if Quebec modified the Consumer Protection Act in August 2018, notably by prohibiting the billing of brokerage fees and making payday loans more affordable, these remain an expensive solution. They should therefore only be used when there is an urgent need for money.