WHAT IS A PAYDAY LOAN?
A payday loan or cash advance is a short-term, small-dollar loan, often used to cover unexpected expenses or to bridge a temporary gap between paydays. Payday loans are normally used to cover short-term financial situations — they are not meant to be long-term financial solutions.
WHY DO PEOPLE USE PAYDAY LOANS?
The reason payday loans are used is different from person to person. For many people in Canada, a payday loan is as an emergency source of short-term credit when faced with a bill payment or other financial commitment. By using a payday loan instead of missing a payment commitment, a borrower can avoid the fees, service charges and other negative consequences associated with a missed payment. When a payday loan is used to meet an unexpected financial need, such as a car repair, it allows the borrower to resolve that need immediately instead of waiting until payday.