The concept of Finance came into existence right from the day human civilization started to evolve because human beings tend to put value in every entity that surrounds them, whether emotional or materialistic.
Finance in simple terms deals with those objects involving money in particular. Modern-day finance has gone through various trials and tribulations and has branched out to different types.
A Quick Summary of Online Payday Loans Canada
One of the major branches that Finance deals with is Loans. Lending money by an individual or organization to another entity, which can be an individual or organization where the repayment has to be done along with interest is termed as a loan. A loan again has its subset of multiple types. Payday Loans is a recent addition to the types of loans available in the current market.
Payday Loans can be defined as a kind of loan without any collateral or guarantor’s protection having lower value but with higher rates of interest. The interesting point about payday loans is about the ease with which you can apply for them and in turn avail them. For example, you can get easy Canada payday loans online in just a few simple clicks.
Payday Loans came into existence in the 1990s. The loan has been named so because, during its early days, the borrower would give the lender a postdated cheque to the lender in exchange for immediate cash. The date would often be the payday of the borrower, thereby earning the name a Payday Loans. In the present day, the situation is a bit different as various other forms of payment are also involved apart from cheques.
Why are Payday Loans so popular?
The main reason for the popularity of Payday Loans is the simplicity and ease with which one can get the loan. Those who have gone into the process of getting loans in one form or another are well aware of how difficult the process is. Payday loans do not involve any lengthy documentation process or multiple checks on various aspects like credit scores, guarantor’s details, etc.
The traditional process starts with the borrowers visiting the lending store to get an instant loan of a small amount in cash and an agreement between the two parties that the repayment would be made when the borrowers received their paychecks. The repayment would be done usually in the form of post dated cheques, which consists of the principal as well as the interest amount.
The modern-day scenario has changed a bit. The borrower needs to provide a nominal form of employment proof usually in the form of bank statements since most of the activity is done online. Even though the process is quite simple, the criteria might vary from one lending company to another.
The easiest part of this whole process is the transaction. In other forms of lending methods, the credit happens a long time after the loan is requested, as it has to go through a lot of approval and sanctions. However, in this scenario, there is instant credit to the borrower’s account when the loan is accepted. Similarly, the repayment can be done directly to the lender’s account without hassles like EMIs, etc.
Payday Loan Landscape in Canada
Canada is considered one of the friendliest countries in the world. However, until recently availing of Payday Loans was not as easy as in the other countries. Even though payday loans are easily available even with bad credit, the Canadian counterparts struggled, especially in this area. The payday lending companies would often follow a lengthy verification and approval process thus delaying the credit to the borrowers’ accounts.
The scenario has changed a lot now, as the Canadian market of payday loans is getting more and more customer-friendly. Along with the private lending companies, the Government of Canada is also taking legislative steps to ensure fair play in the business of payday lending. Almost all the provinces in the country now credit the loan amount within two business days.
The Financial Consumer Agency of Canada is a government agency that has provided a set of guidelines to be followed in case of payday loans. It also provides thorough information about the breakdown of everything involved in the process of getting a payday loan. It also details out the differences in the processes that are followed by different provinces, since their rules differ from one another.
Positive Influences that have affected the Payday Loan market
A recent article in the renowned newspaper The Daily Chronicle stated that the Payday market would be facing a positive boom post the CoVID-19 pandemic. The headlines of the article list out the various celebrated payday loan companies who are forecasted to reap tremendous profits.
It cites a report presented on Global Payday Loans Service Market 2020, which stated that a high-end growth is expected in the arena of Payday Loans businesses in spite of various challenges and cutthroat competition.
The boost is forecasted primarily because of the following reasons:
- Innovative ads
- Activities harboring fair trade best practices
- Extensive research to provide better service as a business
- Internationally relevant analytics providing optimistic influence on the growth route
The report also provides minute information for interested parties so that they can ensure not only stability in the economy but also generate systematic revenue as forecasted.
Criticism and Control
The payday loan business often faces backlash because of high and unfair interest rates. The loan being an unsecured one attracts more interest rates by default. In earlier times, many lenders took undue advantage of the borrowers citing the clause of unsecured loans.
In recent times, as payday loan services are becoming more streamlined, governments of various countries are getting involved and exercising valid control so that there is fair play in the business and none of the lending or borrowing parties is duped. Various laws are passed so that the financial stability of the borrower and the lending company is not at stake and the economy is maintained in a stable equilibrium. There is indeed a need to learn about financial or wealth management in order to protect people’s hard-earned money.