Payday loans top 10 tips

We've done hours and hours of research scouring the internet, government resources and speaking to payday loans lenders to come up with our payday loan top tips.

We hope that you will consider these tips before taking out a payday loan and that they will help you with your search.

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Payday loans top 10 tips

If you're looking for a payday loan in Canada, consider these tips when you do your own research:

1) Do you really need the loan?

Ask yourself if you really need the money and need to take out the loan. Can you get by until your next pay cheque? If you need the money immediately, try to make other arrangements. For example, you may be able to cash in vacation days, or you might consider getting a short-term loan from a family member or a friend.

2) Borrow only what you need

Payday loans are an expensive way to borrow money. Be sure to only borrow what you need, and make sure you have the funds to repay the loan on the due date.

3)Use the same payday loans lender

If you have taken out a payday loan with a lender in the past, it's probably best to use the same lender again. This way you wont have to pay any upfront fees and you could get your loan processed more quickly than if you were a first time customer with another lender.

4) Understand the costs

Payday loans are very expensive. In some provinces they can charge up to $31 per $100 borrowed, and if you were to borrow that for one day, that would be the equivalent of 11,315% interest per year! Be sure you understand the complete costs before taking out any loans.

5) Consider your current lenders

If you haven't tried your current financial institution such as a bank, credit union or trust, it's best to check with them first (even if you think you'll be turned down). See if you can take out overdraft protection or a line of credit for a short term use of funds. These are relatively inexpensive ways to get money quickly in an emergency if needed versus a payday loan.

6) Investigate options

If you are turned down for any of these credit options, ask the company why. If you find out that you have a poor credit report or poor credit history, your main goal should be to found out why this is the case and try and work towards fixing this issue.

A good first step towards doing this is contacting the two credit-reporting agencies in Canada, Equifax or TransUnion, to get a copy of your credit report. Read the reports over carefully and make sure that all of the information on them is correct. If you find any errors, contact the credit-reporting agency and find out how you can have the information amended. You can get a copy of your credit report for free if you request that it be sent to you by regular mail.

If you'd like some help with repairing your credit you can contact Credit Canada who have programs available to help Canadians improve their credit score.

7) Check if the payday loans lender is registered

You can check if the payday loans lender is registered with the Canadian Payday Loan Association (CPLA).

As of July 2010, it was not mandatory for payday lenders to register with the CPLA but it is seen as industry best practice.

8) Make sure you'll have the cash to repay by the due date

After reviewing and making sure you need the loan, only borrow an amount that you are totally confident you can repay by the due date to avoid further costs and charges.

9) Ask questions

Don't be afraid to ask a lot of questions. Ask about all the fees, charges and interest that will be included in the loan and what happens if you are late paying it back. Read the loan agreement carefully, take it home with you and keep it for your records. Don't feel pressured to sign it right away.

10) Don't rollover loans

Payday loans lenders charge very high fees for rolling over your loan. If you are taking out a payday loan at another location to pay back the first payday loan, or you are extending or "rolling over" the loan that you had with the same lender, you could get yourself into serious financial problems very quickly. These fees, charges and interest will add up quickly and stack up your personal debt.

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