Payday loans seem like one of the most convenient options to most. The benefits they offer, the problems they solve, and most importantly, the flexibility in repayments are some of the best things about these loans.
You can pay your emergency medical bills, cover up your over-run monthly expenses and so on. It nearly has you covered from all sorts of urgent cash needs. And more surprisingly, these loans are the easiest to get. Regardless of your credit score or your bank balance you can take out a payday loan in whatever amount you need. And not just that you can expect to receive the loan amount within a few hours of your application.
Notably, one of the trickiest parts that most applicants struggle with is evaluating the tax implications. To put this into perspective, when you apply online for payday loans in Alberta you need not pay income tax on it. However, you’ll still be required to pay tax on the transaction.
Yes, that’s tricky right?
Don’t worry, this article will help you navigate through your payday loan application. And will also help you understand what you should expect in tax benefits.
So, without any further ado, let’s begin.
First of all…
The Application Process
As already mentioned the ease of application is one of the many reasons why people opt for payday loans. The process is as easy as taking a walk in the park.
Finding a lender…
You’ll first need to find a lender that offers a payday loan. Notably, conventional banking institutes won’t help you in this case. In other words, you’ll need to find a private lender.
The easiest and most reliable way to find a private lender that can offer you a payday loan is through online money lending networks. These networks can connect you with many lenders at once. So, you can also get to choose the one that fits your budget and meets your needs at the same time.
Sharing your details…
Ideally, you’d need to fill in and share your details before you can connect with any lender. Even so, once you know where to find reliable private lenders, you can share your personal details with more confidence.
You’ll need to share some basic details such as your name, your address, your bank account details, and your employment status. Besides, you’ll also need to show your income. But, thankfully, none of these, apart from your income, can make a difference to your chances of loan approval.
Choosing the right plan…
Chances are, as soon as you apply for a payday loan online, you’ll be approached by many lenders. Some would offer you more loan amounts but at higher interest rates. While some may offer you a loan for a longer period.
You’ll need to find the right balance between what you need and what you can borrow. Ideally, you should look for a plan that offers you longer tenure at a lower interest rate.
Just when you think your financial troubles exist no more, you’ll realize that you are to pay more tax than usual.
When you take out a loan you receive it in your bank account, but that does not count as your income. So, evidently, you cannot claim returns on the taxes you pay. On the contrary, the amount still belongs to the lender. You pay the taxes and the interest rates on the loan amount as well.
So, you might wonder how does an online payday loan benefits you with tax-laws.
Cash Advance based on child tax benefits
In Canada, every citizen is entitled to receive financial aid for their child’s expenses. Notably, financial aid is offered by the government of Canada until the age of 18 for the child.
The benefit that you can avail of as a parent would depend on the taxes you pay. And it is bound to increase annually. So, if you’re receiving $1000 for your child’s care in the year 2020, you can expect to receive $1100 in 2021. But, then again this increment depends on your annual tax returns.
Why, are we discussing child benefits?
Well, it is noteworthy that the child tax benefits are considered as your income. And to your surprise, you can borrow cash advance on it. Often known as baby payday loans as well, these short-term credits are remarkably helpful for single and struggling parents.
Another noteworthy fact is, when you take out a payday loan on your child’s tax benefits, you can expect the processing fees to be lower. Plus, you can also expect income tax exemptions on your cash advance.
The only benefit is rebated on income tax
It is noteworthy since we’ve been mentioning it over and again, your payday loans are not tax exempted. So, expecting to save on taxes when you take out a payday loan might be foolhardy.
However, since the loan you take out does not count as your income, you are entitled to claim an income tax rebate on the amount. What it means is, while you’ll be paying taxes on the processing fees and rate of interest, you won’t be paying any tax for the principle.
So, you actually get to escape and save some taxes when you take out a payday loan. Regardless of the reason for which you take out the loan.
Payday loans are undoubtedly a great option when you need urgent cash. Whether it is to pay for your child’s school fees or buy groceries or cover your car breakdown, a payday loan is there for your help.
Moreover, you can expect to receive the loan in about 24 hours, as already mentioned. And surprisingly, all these benefits come at a reasonable price- you don’t have to pay sky-high rates of interest.
So, should you be taking out a payday loan? Well, it still depends on your situation and individual preference. If you’re thinking about tax benefits on short-term loans, then you should look for other options. There are plenty, including installment loans, cash advance on your credit card, and so on. But, if tax savings are the least of your concerns, then online payday loans might just be perfect for you.