No one likes fine-print, but in the payday loan industry, those small pixels get more careful criticism … or they should. A good consumer is an informed consumer, and an informed consumer is generally a happy consumer. Never avoid reading the fine-print on anything, especially when applying for credit of any sort.
So, without further ado, here are the most common fine-print finds on payday loan websites.
Late Payment Policies
Hopefully you won’t default on your loan, but if you do, know how much your new balance will be with interest and a possible late fee. A percentage should be clear as day, explaining the calculated interest on your principle balance. Lenders manage the additional late fee differently, more often than not. At GoDay.ca, we will charge a one time $50 fee for a pre-authorized debit (also known as a PAD) that bounces back. What this means is that if on the date of our agreed upon payment date, we go into your account to pull the payment and it comes back as insufficient funds, you will be charged an additional fee in addition to your loan amount (and accruing interest). So do yourself a favour – have the money ready to be withdrawn on your loan repayment date. Having interest and fees building up is only going to hurt you.
What should you do if you really have no choice? We understand things come up – after all, isn’t that why you applied for a short-term loan with us? That being said, we hope you understand that we are willing to work with you should difficult circumstances arrive. Call us as soon as you know you can’t make the payment and maybe our loan agents could work out an alternative arrangement. Your cooperation will also look better on your account with us, making you eligible to borrow more later (once your balance is paid in full, of course).
Some lenders might automatically renew loans once one is repaid. The reason for this is an assumption that the borrower is dependent on that cash flow. It may seem well intentioned, but we don’t operate that way. Why? It’s a slippery-slope to uncontrollable debt. If you want to re-borrow, that’s fine, but our policy is that you must repay your balance in full & re-apply. Also, it’s the law.
Non Payment Policies
If after several attempts a lender cannot reclaim the balance owing, they will generally use any collections means necessary. This is no different than a bank, or a credit card company that has a balance outstanding or a contract broken on the end of the borrower. Again, we understand things come up but we also have obligations on our own end to meet. Avoid a potentially ugly situation and work out an arrangement and stick to it. Non payment is really bad news for your credit report, and it doesn’t take long to impact it either.
Maximum Borrowing Policies
Most lenders in Canada offer up to $1,500 for returning customers. However, there are some lenders who offer “lines of credit” that exceed this amount. Understand the difference between a payday loan and a line of credit, even if obtained from an official payday lender. Lines of credit with a payday loan lender may have much higher interest than a credit card with one of the major card companies, but operate with similar rules (borrow, re-pay with a grace period, etc). Payday loans are just that – you get a loan, you repay on your pay date. Make sure you know what you’re applying for before you submit your form.