Explainer: How do payday loans work?

March 5, 2021
MoneySense

Payday loans are short-term, high-interest-rate loans that you generally need to pay back within the typical two-week payday cycle. Are these lenders filling a need, or are they preying on Canadians who aren't able to borrow money from conventional sources? In a conversation with Alexandra Macqueen, Cardus Vice President External Affairs, Brian Dijkema notes, "There’s a certain inequality to affordable credit in Canada.” He adds, “One way to ensure that people on the economic margins have access to reasonably-costed credit is to be open to the development of unique solutions—through technology or social networks, for example—that can provide positive examples of low-dollar lending.”