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Payday Loans Canada No Credit Check Market
30 Jul 2019

Are New Laws Stifling the Market For Payday Loans Canada No Credit Check?

More and more Canadians are seeking out payday loans Canada no credit check as a response to poor personal economic conditions. Lawmakers have picked up on this fact and are trying to limit the spread of these businesses as a result. This is supposed to help keep consumers from potentially predatory offers, but does it really work like that? The truth is that these laws might be having the opposite effect on non-online payday lenders.

The Demand For Loans

If you spend much time speaking to average Canadians in your daily life, you’re probably already aware that there is a sense of unease around many of them regarding their financial lives. People are worried about the cost of living and their inability to keep up with it. Many Canadians haven’t felt the effects of a wage increase in their daily lives for many years, and their budgets are starting to become very strained. A large number of them don’t have enough to cover their rent or buy the food that they need, never mind taking care of any unexpected expenses. Savings are often non-existent since there is so little left over at the end of each month, so it’s hard to rely on those either.

Much as these people would like to be able to get by on their wages alone, many are not finding this to be an achievable goal at this time. There is a gap between what they need and what they can afford. Payday loans are one way to fill this gap. They’re not the only possible solution, but they’re quick, convenient, and short-term only. That last point may sound like a downside in the context of issues that will likely take some time to clear up, but it’s a good thing in the eyes of many consumers who choose these products. Opting for something that is only meant to tide you over instead of something that is meant to solve a more permanent issue makes it easier to keep feeling hopeful that things will sort themselves out.

New Laws Make Things Hard For Consumers

Even though there is an obvious market for short-term money-lending in Canada, there are other forces at work that are making it harder for consumers to have as many choices of lender as they might want. It is currently popular for politicians to propose laws which limit the number of payday loan outlets that a particular city or municipality can have within its borders. For instance, Kitchener recently voted to restrict the spread of payday loans within the city limits, citing that there were already 18 of them that residents could borrow from if they chose to do so (not to mention all of the online options that they could also access from anywhere in the province). They are just one of many cities to do so in the recent past and they will not be the last to do so either.

It’s easy to say that there are too many payday loans Canada no credit check being offered in your town if you’re not one of the people who would normally be a customer of such a business. If you do use these products, however, you know that a little more competition is never a bad thing. It’s very common in payday lending to charge the maximum amount allowed by law, which makes these loans extremely expensive for borrowers. Unfortunately, there is currently little pressure on lenders to change this paradigm. They are almost always able to gather up enough customers

The Way Around The Problem

Despite this potentially significant setback for consumers looking for short-term loans in their area, there is a solution that promises to help out with that issue: online payday loans. We mentioned them briefly above, but we need to talk about them again because of how they get around the barriers that are starting to be enforced around in-person physical loans. An online lender doesn’t just serve the area they are in. At the very least, they will serve the whole province in which they are located, if not the entire country as a whole. This means that they are not subject to the restrictions being talked about by cities and municipalities. The online loan market is a much bigger pond than that, and that means it’s much closer to being a proper free market. Every lender out there knows that there are dozens of other lenders you could go to instead of them, and thanks to much lower barriers of entry now that everything is digitized and can easily be run through a computer, there are more companies entering this market every day. No one institution can really take your business (or anyone else’s) for granted in this setting.

Because of this more competitive environment, lenders’ behaviour may start to change. While many lenders still charge the maximum rates they are allowed to, there are some exceptions to that rule that you can choose to do business with if you’d like. Perhaps more importantly, though, the lenders here are much more likely to have trouble pulling enough attention away from their competitors to remain viable over time. This means that it is conceivable that more of them will have to resort to price decreases in order to stay alive in the long run. This is not guaranteed to happen, and if it does, it may only be a small drop that is just enough to keep a foothold in the market. However, even this little incentive is more than what brick-and-mortar lenders have working against them at the moment. If ever the credit pendulum was going to swing back into the consumers favour, it would happen on this frontier, not on the old one.

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