1. Understand the risks of a payday loan

Payday lenders charge much higher interestrates and fees than banks,credit unions, or credit cards.

Because of their high interest rates and fees, the risk of taking a payday loan is you will get into more money trouble. This happens to a lot of people.

If you can't repay your payday loan on time, the lender can:

1. Add late fees and other charges to your loan. They can also charge interest for the time after your payment was due. This can be up to 2.5% per month. These additional charges can make it very hard to pay back the loan, and can cause you a lot of trouble in the future.
2. Report you as delinquent or send your file to a collection agency, which means that the collection agency will try to get repayment from you. Both of these will affect your credit report and make it harder for you to get loans in the future.
3. Take you to Small Claims Court. If the lender wins in court, the court might allow them to take some of your money or property. The court may also allow the lender to take money directly from your paycheque. This is called garnishing your wages.

The lender can't give you a new loan to pay off your old loan.