Why Responsible Lending Practices Matter

Blog Header - Why Responsible Lending Matters

 

Payday loans don’t have a great reputation, even in areas where they are highly regulated. This is due to, unfortunately, lack of responsible lending practices for the majority of their existence.  At GoDay.ca, we’re often fighting the battle of proving that you can indeed get a payday loan from a reputable & financially responsible lender.

As more and more legislation is being introduced and altered, we wouldn’t be surprised if we saw payday loan companies becoming more well-rounded financial services institutions; not quite banks, but almost.

Our goal here is to always operate within the delicate balance of responsible lending and offering aid to those who need and want it. Some lenders might be willing to give you whatever you ask for in a payday loan. There are many reasons we don’t find this to be a reasonable approach, not to mention it would inevitably throw you into a debt cycle – the debt cycle this industry is so often accused of perpetrating. We’d rather not make your situation worse.

Our short-term solution is intended to help you get back on track, not further off of it. We will put a ceiling on how much you can borrow with us that is dependent largely on your income. If you make $2000 net every paycheque, sorry, but there’s no way you can ask for that much. The maximum we offer to all customers, regardless of income, is $1500. This is based on significant amounts of data we, and industry professionals, have deemed to be the absolute maximum that is safe to offer in such a quick turn-around loan.

It doesn’t benefit us in the slightest if we offer you a loan that you can’t repay. This is something our critics fail to understand when analyzing all players in the payday loan industry. Yes, there are some companies that may go beyond that, but it’s not everyone. We stress financial responsibility first.

Even if, based on your income, what you’re asking for seems to be reasonable, we look at other criteria to determine whether or not we think it’s a responsible choice to lend to you, however little it might be. If we think it’s going to just add to your financial load in an unhealthy way, we may say no.

Responsible lending practices matter greatly for three primary reasons:

1 – It won’t benefit you in any way if you get stuck in a cycle of debt. Regulations in Ontario and British Columbia do prevent “roll over loans“, so it is more difficult to get stuck in a “trap”, but having responsible lending practices in place helps prevent it even further.

2 – It won’t benefit us in any way, either. It’s a poor business model and it’s damaging to both your local community and the Canadian economy at large if your cash-flow is in any way inhibited.

3 – This practice of “lend to everyone no matter what” needs to stop. If the payday loan industry is going to keep up with the ever-changing needs of Canadians finances, then that end-game must change as well.

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