When you ask for loans in Montreal, it isn’t unusual to get bombarded by dire warnings of how using a payday loan will completely ruin your finances. However, these short-term loans are primarily designed to help you in a financial emergency. With smart use, you can successfully manage these loans in a way that allows you to meet current financial obligations without accruing additional debt. Don’t let these common myths scare you off.

Myth #1: Predatory Interest Rates

People are sometimes wary of payday loans because of the high interest rates — but the problem is that these rates are usually taken out of context. While it is true that payday loans have a high APR, it is important to keep in mind that this is a yearly rate that encompasses all fees and interest associated with the loan.

Payday loans aren’t meant to last for a year or more. In reality, these rates are quite comparable to late fees charged by most credit card companies. These short-term credit card fees would be even more frightening if put into APR terms. Putting the interest rate in proper perspective is essential.

Myth #2: Hidden Fees

Another argument against payday loans is that you will be hit with hidden fees or changes to your interest rate after taking out a loan that makes it impossible to pay the money back. This simply isn’t true. All lenders are legally obligated to provide you with all information related to the loan. This includes fees, interest rates, late charges, and more.

A payday loan lender that is operating within the law will not and cannot make changes to this agreement after you have signed for the loan.

Myth #3: Targeting the Poor

Some assume that payday loans target low-income families who are financially unstable. In reality, many people use these loans to get out of a tight spot. Though you might not need a credit check, you still need to provide proof of employment, income, and residence.

Many lenders use this information to determine how big of a loan you can afford (typically a few hundred dollars). As long as you are managing the rest of your finances appropriately, this ensures that you won’t be able to take out a loan that is too big to pay off.


Payday loans aren’t suited for every situation. That doesn’t mean that they are entirely worthless. By becoming more informed on how these loans actually work, you can make a better decision regarding when and how to use them. This way, you will always be in control of your money.