Payday loans in Canada are legally allowed under section 7 prohibition of the Criminal Code, as long as the country of the borrower has legislated enough provincial laws regarding the lending of payday loans within their jurisdiction. This is an exception to the general rule that payday loans are illegal everywhere in Canada, because even if a province legalized the lending of payday loans, there is still an illegal nature of lending on the part of the lender. In other words, there are still some illegal activities regarding the lending of payday loans in Canada. Fast cash loan at flexiloans.ca
Typical Payday Loan Process
The most common problem that occurs with payday loans Canada is the lack of credit qualifications of the borrowers. Because it is illegal to lend money under the name of a Canadian citizen without first obtaining the necessary credit documents, many potential lenders to resort to asking for collateral in order to lend to Canadians. However, some provinces such as British Columbia have made it illegal to require collateral in order to lend money, thereby making it impossible for a potential payday loan lender in Canada to obtain the needed credit documents from a borrower in another province without an accompanying security deposit. With this form of “collateralization,” a lender becomes dependent on other forms of security in order to obtain loans, and the practice becomes a very inefficient form of lending. If all provinces followed this practice, the market for payday loans in Canada would dry up overnight. Therefore, even though payday loans can be very profitable business, this form of lending is still considered illegal by many provinces in Canada.
Another problem that occurs with payday loans Canada is that some of these lenders charge exorbitant interest rates. Payday loans are very popular among those who need instant cash, and they tend to get carried away and ask for more money than they can actually afford to repay in advance. Because of this, payday loans in Canada are considered to be unsecured short term loans – even though in reality they are technically secured loans (although a collateral guarantee is not always required). In short, a payday loan lender in Canada may very well borrow money against your property, but the loan must be paid back within a period stipulated by the lending company.