Payday Loan Versus Bounced Check
If you are going to be late on a monthly payment, you may want to consider getting a payday loan. Even though you will have to pay a higher interest rate than if you took out a traditional bank or installment loan, your good credit would remain intact.
If you paid the above- referenced bill by check (hoping that it would not clear until your next payday) you would be taking a huge risk. You would also have to pay a non- sufficient fund (NSF) fee to your bank and another NSF to the company receiving your check.
Bank NSF fees run around $45. 00 per check. The company you owe the bill to would, no doubt, charge you severely for an NSF. Each time your check bounces at the bank, you would have to pay the $45. 00 fee. The same applies to the company you owe the money to.
If you bounce a check more than three times a year, your NSF fee will double at the bank. If the bill was for a utility, such as your gas or electricity, after several NSFs in a year, your service may be discontinued. Once this occurs, you will be required to pay a deposit before the utility company would reinstate your service.
In Ontario, payday loans have an interest rate of 21 percent. This means that if you borrowed $500. 00, your interest would be $105. 00 with your total payback amount at two weeks being $605. 00.
If you live in Saskatchewan, interest on a payday loan is much lower at 17 percent. With $500. 00 borrowed, your interest payment would be $85. 00 with a total payback of $585. 00.
Payday loan interest rates in British Columbia are the highest at 23 percent. On $500. 00 borrowed, your interest would be $115. 00 with a total payback amount of $615. 00.
Compare $90. 00 to the bank and utility company in NSF fees with $85. 00 through $115. 00 for the payday loan. All these fees are in the same ballpark, except that, by paying your bill with a payday loan, your credit would not accumulate a derogatory mark, your bank record would remain unscathed and you would not have to pay a reinstatement deposit.
Payday loans are for emergencies, such as keeping a bill from becoming delinquent, emergency car repairs or payment to the dentist for an emergency procedure. As long as you borrow responsibly, a payday loan is worth considering.
This information was contributed by My Canada Payday. They are, in my opinion, a reputable lender who is proactive in protecting borrower’s rights and provide fair and honest service as well as delivering accurate information to consumers to help them make the most informed decisions possible.
