Money Mart: Using Payday Loans for Unexpected Expenses

Many people know the panic that accompanies an unanticipated bill or payment. In these cases, a payday loan could be a useful solution.

Payday loans offer quick and convenient access to funds that can be easily repaid on the borrower’s next payday. Most payday loans are approved on the same day, sometimes within a matter of minutes.

That said, not every situation calls for a payday loan. Since these are small and short-term loans, they may suit some situations better than others. Here are a few instances in which a payday loan can help.

A pet needs medical attention

A pet owner without pet insurance may take a big financial hit if their furry friend takes ill or suffers an accident.

Medical care for pets can be expensive; even just spaying or neutering a pet typically costs more than most people expect. For anyone who’s sure that their next paycheque can cover the cost of the treatment but needs a temporary solution, a payday loan may be the way to go.

Unanticipated travel

When a parent or close relative becomes ill or passes away, it’s common to travel back home and spend time with family.

Last-minute flights can be expensive, and not everyone has savings that they can rely on to pay for unforeseen travel. A payday loan can help cover the cost of tickets until the next paycheque arrives.

Pressing car repairs

Most people use their cars almost daily, so ignoring that check-engine light is not a good idea. While the prospect of paying for car repairs can be daunting, it’s better and safer than using a car that may be unsafe.

A payday loan provides up to $1,500 to cover the cost of urgent car repairs so borrowers can feel safe and secure while using their cars.

Utility bills

While it’s a good idea to plan and budget monthly expenses as much as possible, sometimes mistakes happen.

Something as simple as forgetting about a planned direct debit, such as an annual insurance premium or a credit card bill payment, can leave someone with insufficient funds for utility bills. A payday loan can help cover any shortfall so borrowers can get through the month without losing any essential services.

When to avoid payday loans

Payday loans aren’t the right choice for every situation, so it’s a good idea to take stock of one’s finances before applying for one. Here are some cases where a payday loan may not be as helpful:

• Loans exceeding $1,500: The limit on payday loans is $1,500 in Canada. Anyone who needs to borrow more should consider other financing options.
• No verifiable income: Payday loans are available to applicants who can provide valid proof of income, such as paystubs and bank statements. Without a fixed “payday,” it may be challenging to secure a payday loan.
• The applicant needs a long-term payment plan: Payday loans are designed to be repaid on the applicant’s next payday.
• The applicant already has a payday loan: Most lenders can’t issue a second payday loan to someone who already has one due to regulations on the provincial level.

The bottom line

Payday loans can be a great way to cover emergency costs when money is tight. Before applying, it’s important to consider whether the loan amount and repayment terms fit one’s financial situation.