Payday Loans

Question: I feel embarrassed to admit that it has been difficult for me to pay a payday loan of $600 I obtained from a payday loan provider about four months ago. However, I appreciate the borrowed amount because I got help when I didn’t have enough money to meet my rent expenses. I was planning to reduce my expenses and pay back the payday loan using my next paycheque. However, after I paid the loan, I realized that I was short of cash and I had to borrow to meet my expenses. This has become the trend; borrow money, finance my expenses, run out of cash, borrow more money! Well, I have bad credit and my bank informed me that I have to wait for an entire year to be approved for a credit card. I feel I can’t wait for that long. Kindly help me. Sarah.


Your situation is a common one. Each year, the Credit Counselling Society handless a big number of clients facing difficulties when paying the payday loans. Note that it seems like a good solution to borrow a few hundreds of dollars to correct cash shortfall especially if you can’t access overdraft and conventional credit such as credit card.

The law requires the payday lenders to ensure that any borrower is aware of the cost and terms before obtaining a payday loan. But in most cases, when you are facing a serious cash crunch, you tend to focus on how you can correct the financial difficulty rather than the challenges and costs associated with the loan.

Payday loan costs

In most Canadian provinces, there is a legislation that specifies the maximum charges a payday lender should impose. Note that these charges are based on maximum rate for every $100 borrowed. The rate varies and can be any amount between $25 and $22. Well, paying additional $75 to a loan of $500 sounds like a better option when facing financial crisis. However, you need to know that the annual interest rate on a loan that charges you $15 for every $100 you borrow translates to 400%!

Understand that there is a payday loan cycle

If you’re facing financial difficulties, a payday loan can help you sort out your expenses. However, if you happen to lack enough funds to pay the entire loan on a payday, then chances are that you will repay part of the loan. In some cases, people pay the loan in full ad since they might lack money to meet their expenses, they end up borrowing again. And the cycle continues!

A single payday loan might lead to a series of loans

In most cases, using payday loans to correct financial shortfalls might mean that you are spending more than you earn. If you decide to borrow to finance your expenses then you don’t get enough money to pay the loan and fund your next month’s expenses; consequently, you’re likely to borrow to pay the loan or to finance your expenses after paying the loan!


If you’re facing difficulties when repaying your payday loan, you can contact the lender and request them to extend the loan repayment. Besides, you can consider debt consolidation as an option. This will require you to get someone who understands the issues related to debt consolidation services Toronto to help you.


The experts at York Credit are here and ready to help. What are you waiting for? Let’s start talking!