What is Faxless Payday Loan in Canada?
Faxless payday loans are the easiest payday loan to get online. This article decodes and simplifies faxless payday loans to help you understand advantages and disadvantages of borrowing these loans.
If you start surfing for personal loans, you will very often come across the term faxless payday loan. Many people get surprised because it seems out of place to have a word ‘faxless’ associated with a loan. Not a big deal, if you are also surprised by reading the term - faxless payday loan.
Don’t worry, in this article we have thoroughly explained what this loan is. However we have started by explaining payday loans so that you know the concept behind faxless payday loans.
Do you know how a payday loan works?
A payday loan is primarily a short term loan that you borrow to meet your urgent and unavoidable cash needs of small amount. Usually these loans are borrowed when you don’t have cash readily available for your urgent needs.
With payday loans, borrowers typically avail loan up to $1000 which is required to be paid on your next payday. Since these loans are paid on your next payday or when you get your next paycheck, these are called payday loans.
However, these loans are also called cash advance loans because in real sense lenders pay you cash advance that you typically adjust on your next payday.
We will discuss about why you should avoid borrowing payday loans later but know that borrowing payday loans is very easy, simple and convenient. You don’t need to provide any collateral for these loans. You simply need to be a major, have a regular source of income, a valid bank account and a phone number.
These loans are no credit check loans, therefore no credit check is done by the lender. Your credit score is immaterial for these loans. This makes the process of lending very fast. Since these are no credit check loans, even someone with poor credit or no credit can also avail these loans.
While reading the above, you must have felt that payday loans are ideal for your urgent cash need, but it is not so. This is because the interest rates charged for these loans are exorbitantly high. In fact it is not uncommon to have interest rates of these loans as high as 500%.
In addition, there are huge late payments and fines. Such high interest rates, late payment charges and fines added to the principal amount make it very difficult for borrowers to repay the loan.
As a result these loans are seen as predatory and are called a debt trap, which is difficult for borrowers to escape. However, since no credit check is required, even people who do not have adequate repayment capacity are given these loans, which ultimately trap them into a debt cycle. This point is discussed in detail later in this article.
How Faxless Payday Loans Canada is different from payday loans?
To borrow a payday loan, you need to provide or submit your documents to the lenders. Now, here comes the difference. A faxless payday loan is similar to a regular payday loan except how you submit your documents to the lenders.
In a faxless payday loan, you can submit your documents electronically instead of faxing your documents. Therefore the name makes a lot of difference. Faxless payday loans are the easiest payday loan to get online.
Why faxless loan?
Faxless payday loan is designed to provide more convenience to borrowers than a regular payday loan. In this type of short term loan, you essentially don’t need to fax your multiple documents to lenders. You can electronically send documents to lenders and get approval for the loan, which make the process fast and convenient.
What are the benefits of faxless payday loan?
Faxless payday loans got traction and acceptance among borrowers because one can transfer documents electronically from anywhere anytime, which is not the case with fax. This makes the entire process hassle-free.
The importance for lenders is that in case of electronic means they receive the potential borrower’s documents instantly and therefore can evaluate and approve the loan within hours. This makes the whole process of borrowing, from application to disbursal of loan into the borrower’s account, very fast.
In a sense this process provides better experience to borrowers. Better experience for borrowers is important because after all lenders get their business from borrowers only.
Another advantage of faxless payday loan is that in case of repeat borrowers, they don’t need to submit the papers again as lenders already have it in electronic format. After all internet and related technology has made it possible to scan and transfer documents instantly and save it for future reference also.
Yet another aspect of faxless payday loan is that because of fast processing, borrowers tend to reach out to those lenders first who offer faxless payday loans than those who do not offer such loan. Therefore it gives advantage to lenders over their competitors.
All Payday loans are practically faxless today:
However, in true sense all payday loans are faxless today since most of the borrowers and lenders accept documents through e-mail and such other electronic means. However, you still have the options to send your papers through fax but it delays the process and hence there is no point in delaying the process when you need the short term cash assistance fast.
Why should you avoid faxless payday loans?
Yes, despite the above mentioned benefits, the fundamental problems of payday loans remain the same- exorbitantly high rate of interest and late payment charges which make the repayment very difficult for most of the borrowers. The high chance of falling into a debt trap still remains same with the faxless payday loans.
Let us understand it in details- These loans carry very high interest rate even more than 500% in some cases. In addition, there are huge charges if you do not repay the loan as per schedule. There are high charges in case your cheque does not get cleared from bank due to insufficient money in your bank account.
Lenders take a post dated cheque of the required to be enchased on the due date or take electronic clearing permission from you. As soon as the due date comes, they deposit the cheuqe into your account and if it gets dishonored, you are charged heavily.
The interest and charges coupled with the principal amount becomes very high, which makes it very difficult for someone who is already in short of money to repay in time.
Now, when the due date arrives and if you do not have adequate money to repay the entire loan, lenders give you the option to pay a fee and get extend the repayment duration which seems a reasonable solution for most of the lenders-But this is the start of the debt cycle.
This cycle continues and suddenly you realize that you have to pay or already paid much higher amount in interest than the principal amount you borrowed. Therefore these loans are called a debt trap.
How much time does it take to borrow faxless payday loans?
Today most of the lenders offer online payday loans. Also, faxless payday loans are no credit check loans and therefore do not require lenders to look at your credit profile. These facts make payday loans very fast. In most of the cases, you should get cash in your account within one or maximum two working days after completing the application process.
When need occurs, should you jump to payday loans right away?
No, because by now you must have understood that these are highly costly loans. Therefore you should borrow these loans only when you don’t find any alternative cheap financial assistance. For example, you can explore cash assistance from family members and friends. Mostly such assistance comes without cost and charges. However these may be considered a personal or social obligation, which most of you may not like.
Getting cash assistance from credit union or a personal installment loan from bank are other alternatives. These loans are offered for a longer duration at a low interest rate.
Another key advantage of personal installment loans is that the entire amount is divided into installments and therefore you pay only a portion of the total loan at a time. However the big difference is the low interest rate.
In case of both, short term cash assistance from credit union or personal installment from any bank, the rate of interest remains much lower than a payday loan. Therefore these loans do not become a financial burden for you. You can repay these loans by paying one installment of much lower amount at a time, unlike a payday loan in which you need to pay the entire amount on your next payday.
When should you borrow Faxless Payday Loans in Canada?
It is most important to note that you should borrow payday loans only when cash assistance is not available from any other sources. If at all you plan to borrow, you should get it for your small, most urgent and unavoidable cash needs. This is advised because payday loans are the costliest personal loans.
In addition, there are high chances of default and roll over of these loans which ultimately results in higher fee. As you know, the amount of interest and fee goes much beyond the cash borrowed. Therefore you should borrow these loans only when you can’t get money from other sources and can’t avoid the urgent needs.
What for you should not borrow these loans?
As explained above, payday loans are very costly loans. Therefore you should avail it for urgent and unavoidable cash needs only. You should avoid using these money for needs that can be delayed such as holiday, family get together, gifts etc. Remembers these are not unavoidable events and hence does not justify borrowing money at high cost.
Today many Canadian find themselves short of cash to cover last minute expenses, which mostly occur just before their payday. In such cases, mostly people turn to payday loans or a derivative of payday loans such as faxless payday loans or similar other loans.
These loans are definitely very easy, fast and convenient to borrow. The process is so fast that you can expect cash into your account even within one working day. These are of great help when you need only a small amount of money for a very short duration because you know that very shortly you have your next payday.
However despite all benefits, there is big shortcoming in these loans which is very high cost of these loans. You should be aware of the high cost of borrowing these loans and should have a ready plan to repay the loans, failing which the fast assistance can become a burden.