Fast cash: Where to get it when you need it

Sometimes life brings the unexpected, the kind of curveballs that find you needing a couple hundred bucks, pronto. But if you don’t any money stashed under your mattress, how can you get your hands on some fast cash?

One source that might spring to mind is a payday loan. These financial services firms do indeed offer quick funds. Just be sure you’re aware of the cost of borrowing first.

“Most people who are carrying a high debt load typically don’t have very high credit, and as a result they’re not able to go to traditional lending resources,” says Dan Chometa, community outreach manager at Consolidated Credit Counselling Services of Canada.

“They may go to visit a fringe financial service to get quick access to money, but what they fail to understand are the interest rates and charges associated with them.”

Requests for an interview at Money Mart went unanswered, but the company’s website states that 99 per cent of those who apply for a payday loan -- and who have a job, a bank account, and are over age 18 -- get one. If approved, you can have money in your bank account in as little as an hour. Loans can also be granted online in some provinces.

The catch? The interest rates. They vary from province to province, but consider these examples from Money Mart’s website:

• In Alberta, the annual percentage rate (APR) on a $300 loan originated at a Money Mart branch for 14 days is a whopping 593.13 per cent on a rate of $22.75 per $100 borrowed. That same amount borrowed via a loan originated online at loans.moneymart.ca for 14 days is 599.64 per cent on a rate of $23 per $100 borrowed.

• In Manitoba, the APR on a $300 loan for 12 days is 517.1 percent on a rate of $17 per $100 borrowed.

• In Ontario, the maximum allowable cost of borrowing under payday loan agreements is $21 per each $100 advanced.

Those rates fall in line with other payday loan services. EZ Cash, for instance, charges an APR of 546 per cent on a $300 loan in Ontario. The APR on a $300 loan for 14 days in British Columbia and Alberta is a staggering 598 per cent.

Those rates make credit-card cash-advance APRs of 28 per cent seem reasonable.

“Especially with new electronic payday loans, where companies are able to charge different fee structures, people really need to read and understand the contract terms and conditions,” Chometa says. “There is a difference between reading and understanding.

Statistics Canada estimates only 3 per cent of Canadians have used a payday loan service with young families three times more likely to use this type of short-term lending compared to other age groups. While they may be marketed as two-week loans, the average payday loan takes five months to pay back in full, according to Pew Research.

“The danger we see is oftentimes people get one loan from one of these fringe financial services then maybe they’re not be able to pay off that loan, so then they go to another one because it was an easy way to get money in the first place. Then they can’t get out because they’re dealing with two, three, even four lenders at any given time. There are tons of them out there," Chometa says.

Where else can you turn if you’re strapped for cash?

Family and friends
“Most people would probably go to friends or close family members for immediate cash,” Chometa says. Usually family loans come with very low interest rates or none at all, but of course there are less tangible costs, like potential conflict or feelings of guilt. Consider drawing up a repayment schedule.

Declutter
If you’re really strapped you might have to sell that beloved camera or bike. Chometa isn’t keen on pawn shops, saying the chances of getting good value for your goods are slim. Consider selling your stuff via eBay, craigslist, or kijiji.

Get busy
If time allows, do some odd jobs in your neighbourhood: rake leaves, wash cars, shovel sidewalks, pull weeds, whatever it is to earn some quick coin.

Get budgeting
Of course, it’s essential to figure out your financial situation and plan for unexpected events in order to avoid the payday loan trap. “Put pen to paper to really understand what your financial situation is,” Chometa says. “Maybe you need to cut back on things. Writing things down is really helpful."