How to get out of payday loan debt?

In Canada, accurate statistics on the exact number of Canadians who are “poor” are not available. The only way the government categorizes poor people is when these people have a lower income at median income. In Canada, 15% of the population is perceived as having a low income. But income alone can not determine whether a person is poor or not. This requires assessing whether this person has access to basic resources to maintain their health, well-being, access to education, etc.

The only thing that we can all agree on is that it is extremely expensive to be poor. People who make half of the median income often do not have the same opportunities as those who do have a median income. Let’s take a look at why it’s so expensive to be poor.

Financial resources

The greatest impact of poverty is not having access to the same financial assistance as a person with a median income. Usually, poor people do not have a stable income, making it difficult to pay bills on time, leading to a bad credit rating, making access to an affordable loan nearly impossible.

Payday Loans

The payday loan industry is targeting the poorest. This type of loan is specifically designed to exploit those who have no other choice, being accessible to everyone. There is no credit check, the only prerequisite is to have a job. Once entered the world of payday loans, it is almost impossible to get out. This vicious circle forces you to take another loan only to repay the previous one. We suggest you look at your other options such as loans to get out of payday loan debt.

High-interest rates

Payday loans and other such financial services create more problems for people with low incomes. Being extremely expensive, people are struggling to repay them, so delays accumulate. All delays and subsequent penalties negatively affect a person’s credit score. A bad credit score can complicate the approval process for another loan significantly.

Expensive loans

Getting the loan is a cycle. The more credit you have, the more loans you can get. But you can not get a loan if you have a bad credit score. That’s why it’s expensive to be poor. Loans are a major financial pillar and if you do not have access to affordable loans, you will be forced to turn to expensive options such as payday loans. As a result, you will be swallowed up in a vicious circle, not to mention all late penalties that will continue to accumulate. These problems can also occur in people with a median income. Unfortunately, a bad credit score makes all other financial problems even more difficult to solve.

Household resources

Not having access to affordable financial resources is one of the biggest reasons for poverty, but it also causes other problems. Being poor does not just mean not having the money to buy what you want. It’s more complex than it looks. If you do not have a substantial income or an affordable loan, you will not be able to improve your credit rating and increase your long-term savings.

Transport

Although a car is a significant financial investment, it is also a way to save your time. A low-income person often can not afford to buy a car and so must take public transit. Public transport is not very reliable and can lead to a lot of work delays and therefore loss of employment. The loss of employment will force the person to resort to expensive loans.

Food

Food also has its vicious circle. People who do not have cars often have to buy their products in small grocery stores where prices are often more expensive. In addition, they can not buy in bulk to save.

In short

Being poor is expensive for many reasons that the median employee often takes for granted. Although some challenges can be overcome, the majority is insurmountable for low-income earners.