Canadians Fear Redundancies; Payday Loans Mean Smart Borrowing

While the economy in Canada is considered stronger than with our neighbors to the south, in America, their problems become our problems because 80 percent of our exports are bought in the States. Slower demand down there means cutbacks up here, which can mean job layoffs. It’s never a good time for someone to bring home a pink slip.

When one person in a household loses their job, the burden falls on a second person to cover all the bills from a single paycheck. While that may be possible in the short-run, it’s less than ideal and typically means you operate on a very thin margin. Should an unexpected expense arise, that household can be in real trouble if the expense exceeds cash reserves.

There are several ways in which this situation can be managed. Consider the following:

• Pay bills late – There will be fees and overdrafts. With credit cards, a few late payments might mean an increase in total interest rates. You need to be strategic to see which late payments will hurt the least (usually utility bills).
• Get a car title loan – If you have no payments remaining on your vehicle, you can leverage that as equity to get a loan against the total value of the car. In so doing, you are essentially providing title to the lender. That means you risk losing the car if you cannot make the loan repayment schedule.
• Get a payday loan – Paycheck cash advances, as they are sometimes called, are being called the credit card substitute. These are short-term loans, of moderate amounts ($1,500 or less, depending on how much you earn), that suffice for household emergencies.^†

Why payday loans make the most sense in most situations
Understand that payday loans of today differ significantly from those of ten-plus years ago. To start with, they are transacted entirely on the Internet. This means no faxing.^§ No visiting a cash advance store where you stand in line. You can shop around on the web and take your time studying the loan terms – but the actual application requires all of about five minutes time to complete. The loan funds are sent to your bank account on the same day of application (if you apply early enough in the day),^‡ and you repay the loan through an automatic, pre-authorized debit against your bank account.

The problem with car title loans is the temptation to borrow too much. And paying bills late have longer-term consequences on your credit score.

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