Better Than PayDay Loans

Debt Financial freedom options
Since the American financial fallout, there has been a lack of secondary lenders in the market to help people with short term unsecured financing.  Wells Fargo went back home to the USA, TDFS Financial Services and others like them closed their doors.   Other than loan sharks or “payday loans” company which we can put into the same group, there really are only a handful of options left out there.

It’s good to know that there are better options available for people who need unsecured financing to help them with their daily life challenges.

The problem is exacerbated by these high interest that makes it very difficult for anyone that is already tight on their finances.  If you know about the rule of 72 (compound interest), many end up in a vicious cycle.   Due to the compounding of interest on these high interest loans, most will never be able to get the loan paid off.

Huffington Post wrote an article about “Predatory Lending” you can read about here.

“Instalment loans can carry interest rates sometimes reaching 59.9 per cent, just short of the 60 per cent legal limit in Canada. Some providers advertise interest rates closer to 30 per cent but then impose other fees that drive the overall cost up…”

The statistics are financially terrifying!  Here’s a sample of a “Payday Loan” of $1000.00 plus all the fees and service charges, your annual percentage rate would be:

  • British Columbia – up to 600%

  • Alberta – up to 700%

  • Ontario – up to 548%

  • other provinces are most likely just as absurd!

As you can tell, it won’t be easy to get out of these loans if you are just paying the bare minimum each week.  It’s a tragedy waiting to happen when you are paying $23 for a $100 loan. If you know how compound interest works the borrower is doomed to fail.

I am sharing my view on this subject and this is only my opinion. Please speak with a financial advisor or credit counsellor if you are looking for financial advice. As the article states, beware of any added fees that will make the interest on the loan much higher than quoted.

To calculate what the REAL cost Annual Percentage Rate (APR) is, use this nifty calculator at EFunda: http://www.efunda.com/formulae/finance/apr_solver.cfm

Now that the financial fallout has cleared and the dust have settled, it’s time for you to take charge of your financial future.

Here are several companies that I have found that are providing an alternative option that can really help a family get back on the right track and rebuild their financial future:

EasyFinancial

EasyFinancial

Although this company took over an existing “payday” loan business, they are trying to improve upon that service.  They are also connected with Easyhome.ca which pretty much allows you to rent/lease to own nearly everything that you need in a home.

These guys are the the last stop before you really need to go to a PayDay Loan store.

Beware, the total cost of borrowing expressed as an Annual Percentage Rate is set at 46.96% at EasyFinancial.   Loan Protection Program (LPP) coverage which is basically an insurance product that is optional and has an additional fee. I personally don’t recommend.  Be aware that they may charge you processing fees or application fees which will definitely increase the interest a lot higher.

Here’s what EasyFinancial offers:

  • Loans from $500 to $10,000 depending on your needs

  • Amortized up to 4 years in case of debt consolidation

  • Qualify base on income and credit score (even bruised credit is okay)

  • Bad credit or recently discharged from bankruptcy is okay

  • Report to the credit bureau (can help rebuild your credit)

  • May have administrative fees on top

Direct link to their website: EasyFinancial.com

CitiFinancial

CitiFinancial

If you know someone that is using a payday loan, you might be kind enough to let them know there are alternatives to help them get out of that trap.  It’s not great but it’s a first step in the right direction.

As long as you don’t pay for their “life insurance/credit insurance” that they most likely will “push” you into getting you should be in a better financial situation than the pay day loans scenario.  I’ve heard from several sources that some branch are more aggressive with this than their head office would like.  If they really push you to buy insurance as a condition to advance the funds, you can advise them of your rights and that it is against the law to use “tied selling” tactics against the consumer.

Here’s what CitiFinancial offers:

  • Loans from $300 to $20,000 depending on your needs

  • Amortized up to 5 years in cases of debt consolidation

  • Qualify base on income and credit score (even bruised credit is okay)

  • Although they are more lenient than other lenders, the interest rates start from 26.99% to 36.99%

  • Do not have administrative fees on top

Direct link to their website: CitiFinancial.ca

Vancity

Vancity Savings Credit Union

Vancity’s Fast & Fair Payday Loan provides a much needed respite for those with those that are short on money and longer on days before their next payday.

Here’s the scoop on Vancity’s Fair & Fast loan offers:

  • Loans from $100 to $2,500 depending on your needs

  • Amortized up to 2 years for lower payment

  • Interest rate is set at 19%

  • Report to the credit bureau (can help rebuild your credit)

  • Do not have administrative fees on top

Vancity is a great first step to get out of the vicious pay-day loan cycle.

It is a great alternative to payday loans without the additional fees and services charges that make them much more expensive than quoted. The loan however is limited to $2500 per month. Which may be just what low income folks need to get by until their pay check arrives.

Taking on this loan and spreading over 2 years could make it easier to pay off the loan and makes juggling daily finances easier for low income families.
Direct link to their website: Vancity.com

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GroupLend

GroupLend is the newest one to the party and they fill the gap where you might not yet qualify for an unsecured loan at the local bank.  They have higher requirement than the first two.  However, their loan is very competitive and can be used a stepping stone for home-ownership as well.

The best use for GroupLend is for consolidating credit card debts or help to get you into your very first home (speak to a mortgage broker like myself for details on how to accomplish this).

Main point about GroupLend’s offer:

  • Their interest rate ranges from 5.9% to 17.25% (most qualify under 9.9%)

  • Terms of up to 36 months

  • Report to major credit bureaus (help build your credit)

Here’s what GroupLend say about their offer:

  • Application does not affect your credit score

  • Instant Personalized Quotes

  • Funding in 24 Hours from acceptance

  • No Origination Fees

  • No Early Payment Penalties

  • Rates starting from 5.9%

  • Borrow up to $30,000

Direct link to their website:  GroupLend.ca

If you are interested in checking it out, use the link below to see what you can qualify for:

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I believe in abundance and giving.  Please feel free to share any of my articles to your friends and family or anyone that could benefit from what I have written.  I love helping people from Surrey, Burnaby to Vancouver as a mortgage broker.  I am passionate about helping people have the upper hand when they are financing their home, business, mortgage for their investment property or commercial building.  Please leave feedback as I enjoy reading your replies as much as I write these articles.  Thank you for taking the time to read my words, I appreciate you.   www.SharingBankSecrets.com

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Sua Truong helps alleviate stress for his clients throughout the challenging process of financing their property so that they can enjoy their life and focus on their family or their business.  His integrity is the cornerstone of what he does and why he has been so successful in such a short period of time as a mortgage broker.  In just under 5 years, he has become the #1 Mortgage Broker in his community.  He currently mentors other entrepreneurs and mortgage brokers how to stand out and be outstanding.  This way anyone can become the #1 Go-To Expert in their community.

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