08 Jun Why Canadian Payday Loans are Becoming More Popular?
Canadians are no strangers to loans and credit. At the end of 2018, household debt in Canada reached an average of $1.79 for every dollar of disposable income. In fact, almost 15% of Canadian income goes towards debt payments. As debt grows, so too does the attraction to payday loans in Canada. According to the Financial Post, the number of online searches for payday loans is growing so fast that they outranked mortgage-related queries from June 2017 to June 2018 for online searches.
Growing Demand for Payday Loans.
Of the 10 different types of loans available, the search volume for payday loans was 29,000, over 50% more than mortgages. The top five searches included:
- Payday loans in Canada.
- Student loans in Canada.
- Consolidation loans in Canada.
- Car loans in Canada.
The search might be related to record debt burdens, and rising borrowing costs as Canadians try to find a way to make ends meet.
Payday Loans Avoid Bankruptcy
With debt eating into income, many Canadians are turning to solutions such as payday loans online to avoid missed payments or even the need to claim bankruptcy. Canada’s debt service ratio is the highest it’s been since 2008.
Many insolvency companies are seeing their busiest year since as far back as 1999. Major insolvency service Hoyes, Michalos in Ontario saw a rise from 650 new inquiries in 2017 to 1,000 in 2018.
Payday Loans to Avoid Increasing Costs
Many monthly and day to day expenses are rising for Canadians. In cities such as Toronto and Vancouver, rent and gas alone can put strain on households, leaving very little wiggle room should a financial emergency arise. In fact, many Canadians living in major cities are putting as much as 50% of their income towards rent. Add the 14.9% being paid towards debt, and there is very little left for other expenses including food, auto insurance and paying monthly utilities. This is leading to an increased demand for online payday loans in Canada.
Higher Payday Loans
The increasing costs are leading to requests for payday loans in larger amounts going from an average of $500 to $1000 to a shift to installment loans for as much as $15,000. Installment loans online provide a larger loan in Canada that can be paid off over a longer time period. As other types of loans such as home equity loans in Canada have been tapped out, many people are finding they need an alternative loan for bad credit.
Rising Interest Rates on Canadian Loans
The increase in bankruptcy filings and debt management inquiries could be due to increasing interest rates. It is easy for people to underestimate the impact interest rates can have over a long period of time. This means people are having trouble making their payments month to month. A Canadian online payday loan can be a huge benefit for people who are having trouble stretching their money between pay cheques. Although interest rates are higher, the money is paid off quickly helping to avoid interest fees building up like larger loans.