Payday advances in Canada
In Canada, there is a definite need for companies that provide payday loans. These loans help their customers be able to handle expenses they did not expect. Every year, over two million Canadian residence take a payday advance in Canada in amounts between $100 and $1,500. There are 1,400 offices in Canada that provide payday loans, or the service can be accessed online.
In Canada, companies that provide payday advances
started to appear in the 1990s when people started to express a need to have small, short-term loans. Most companies outsourced their payroll, so employees could not ask for salary advances, which was done traditionally. Banks were not able to process the necessary paperwork for small loans. There was definitely a niche in the market, and the payday loan business filled it.
Companies that provide payday loans will only work with people who can make the proper documents available. They will ask for proof of employment and a personal checking account. According to the Canadian Payday Loan Association, most people who get payday loans have average incomes, and 53% are women and 47% are men. The Canadian Payday Loan Association also says that customers are well educated and understand the costs of the loan, but enjoy the convenience of a needed service.
Payday loans are usually used to pay for unexpected expenses, like emergency medical needs, that would stretch the family budget. The loans are not intended to help families make ends meet each month. To prevent families from doing this, the government will not allow loan companies to roll over debt each month. When a customer accepts a loan, he or she is required to write a post dated check dated for their next payday. This check will reimburse both the loan and interest accrued. When someone takes a payday loan, it is usually because he or she has no other alternatives.
Payday Loan Guidelines
Companies that provide payday loans are governed by both the federal government and additional regulations in eight provinces. In addition to government oversight, the Canadian Payday Loan Association developed its own Code of Best Business Practices. The association encourages payday loan companies to give customers who are struggling with financial difficulties information about credit counseling services. Consumer protection groups see this as a good step toward fixing a financial emergency without increasing customers' amount of personal debt.