Watching the Payday Loan Debt Cycle Through Our Junk Mail

My husband and I have lived in our townhouse for nearly 5 years now. Yet, we still regularly get mail for the former tenants.

At first, we got more mail for them than we were getting mail of our own. So we’d mark it all return to sender and put it back in the mailbox, hoping this would stop the mail from coming.

It worked for the most part, and after a few months, most of what landed in our mailbox was in fact intended for us.

Except when it came to a certain type of mail, that is.

Getting someone else’s mail over the span of 5 years can reveal a lot about a person.

Even if you never open a single envelope, or Google the person’s name.

And unfortunately for one of the former occupants of our address, we learned that “Lauren” has a debt problem.

I could understand why Lauren didn’t bother to update her mailing information and instead continued to let this type of mail come to us instead.

Because we are still, to this day, getting collection notices addressed to her.

At first, the letters were more discreet, but it was still pretty clear that it was a bill of some sort.

We continued to mark them return to sender, but the letters didn’t stop. They only became more aggressive. The huge “Past Due” and “Final Notice” written in bright-red all-caps bold font were harder and harder to miss.

We get significantly fewer collection letters for Lauren now. But it’s been replaced by something that is arguably worse:

Payday loans and cash advance offers.

At least once a month, we get some sort of offer to borrow money addressed to her.

$5000 with no interest for the first month.
$2000 for this one-time introductory rate of only $50
And so on.

Even though I’ve never met Lauren before and have no idea what her life is like, I felt for her. And for anyone else that finds themselves in this situation.

But mostly I was pissed off.

From my limited experience of watching the debt cycle through our junk mail, it felt like Lauren was targeted by these cash advance loan companies. Like they got their hands on the collections list and jumped, knowing that she needed money.

Payday loan and cash advance companies lure desperate people in, promising a simple, easy to get loan.

What they don’t tell you, however, is that it can take years to pay back these types of loans.

The advertised “low” fee of $21 per every $100 borrowed may seem manageable at first, but it’s actually equal to an annual interest rate of 546%.

People in this sort of situation are probably better off using a credit card if they can, where the annual average interest rate is only 19%.

I’ve been very fortunate to have never received a collections notice myself. (And I hope never to!)

But I’ll admit, there have been some rough patches where I thought we’d have no other choice but to rely on a payday loan to get by.

[click_to_tweet tweet=”If you’re struggling financially, taking a Payday Loan may seem like the quickest and easiest solution. But it’ll cost you! Here’s what you can do instead. ” quote=”If you’re struggling financially, taking a Payday Loan may seem like the quickest and easiest solution. But it’ll cost you! Here’s what you can do instead. ” theme=”style3″]

There are Alternatives to Payday Loans

Thankfully, a payday loan wasn’t our only option. It probably isn’t your only option, either.

While the alternatives may not be ideal, they will hopefully help you avoid getting trapped in the payday loan debt cycle.

You may not have to borrow money at all!

Call your creditor.

The first thing I’d do is call the company (or companies) that you owe money to and see if you can work something out. Most companies will work with you to extend your due date or allow you to make a partial payment.

Talk to your employer.

Some companies can make arrangements to get you an advance on your next paycheck. Maybe you can cash in an unused vacation day or two. There may also be opportunities to increase your income by working overtime or picking up extra shifts.

Make money quick.

There are many different ways you can make money quick. (Keep in mind, “quick” doesn’t always mean immediate!) Sell things that you don’t need. Trade gift-cards for cash. Use your reward points. Pawn something. Make money online through sites like Fiverr* or UserTesting. Find a side gig through Kijiji, Craigslist or TaskRabbit. Ask your friends and family if they have any “odd jobs” that they’d be willing to pay you for or know someone that will.

Check with your bank.

You may qualify for a personal loan or a line of credit, or for overdraft protection. If you have a credit card, you may be able to increase your credit limit or take out a cash advance. There will still be fees and interest charges, but they should be more manageable.

Ask your friends and family.

Borrowing money from friends and family can be humbling, awkward and could put your relationship in jeopardy if things go wrong. But if things go right, it could be a straight-forward option that doesn’t have to cost you any extra fees or interest. If they can’t lend you the money you need, maybe they can help support you in another way, such as letting you borrow their car or babysitting your kids for free.

Use emergency community supports.

If things get really bad, see what supports are available in your community. This could include food banks, clothing exchanges, utility assistance programs and emergency financial assistance.

Improvements in Canada

The Canadian government has been making improvements when it comes to payday loan companies by introducing consumer protection laws and tighter regulations.

Some of the changes they’ve made include extending how long you have to pay back the loan, capping fees, regulating the number of store-front locations, requiring licenses for operators, improving interest disclosures, and implementing advertising guidelines.

These do vary by province and municipality, so if you are considering a payday loan, be sure to research what applies in your area.

They’ve also been doing more to educate the public, too.

Do Your Research and Make a Plan to Break (or Avoid) the Debt Cycle

I know I’m repeating myself here, but if you’re in a situation where you need financial help, please take the time to do your research. It could save you a lot of money and help to prevent future hardships.

Payday loans may seem like the quickest and easiest solution, but it will likely also be the most expensive.

Explore all your options. Crunch the numbers and compare them. Then make an educated choice.

Make sure you fully understand the fine print and repayment terms before you sign, if you do decide to take a loan through a bank or through a payday loan company.

The same goes for if you borrow money from a friend or family member. You both want to be crystal clear on how and when the money will be paid back. Get it in writing, so that you’re both protected.

If you did borrow money, how are you going to pay it back? Don’t forget to account for the fees and interest charges.

What can you do to get your finances back on track and hopefully avoid finding yourself in this sort of situation again?

YOUR TURN: Have you ever taken a payday loan or cash advance? If so, how did it go? If not, what have you done to avoid needing to?

Leave a comment below and let us know!

Amanda Kay, an Employment Specialist and founder of My Life, I Guess, strives to keep the "person" in personal finance by writing about money, mistakes, and making a living. She focuses on what it’s like being in debt, living paycheck to paycheck, and surviving unemployment while also offering advice and support for others in similar situations - including a FREE library of career & job search resources.

5 thoughts on “Watching the Payday Loan Debt Cycle Through Our Junk Mail”

  1. This makes me so mad! People are taken advantage of so easily, and while Lauren shouldn’t have fallen behind on her loans, just because she hasn’t should mean that she is incited with offers to lead her further down the rabbit trail! I appreciated the information you gave to help avoid taking those cash advances…

    • Thanks Moriah Joy. I couldn’t believe how aggressive the cash advance companies were/are with this junk mail. It’s non-stop! So even if someone like Lauren was smart enough to throw out the first offer, they just keep coming. All it takes is one moment of weakness or desperation for her to jump. So sad!

  2. I HATE payday loan companies. There, I said it. I know people who are actually fighting laws in their states so that the payday loan companies have to either a) reduce their interest rates or b) offer clear definitions (like “Hey, we will charge you 500%+ a year on interest). I hope these laws pass. Until then, DON’T go to a payday loan place and READ YOUR PAPERWORK! No one should get stuck in that type of cycle.

  3. I took a payday loan one time. It was a small amount of $400 and I was able to pay it back right away. It felt really weird tho, like a back-room deal or something lmao. I don’t suggest it. Try other things first.


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