Money doesn't grow on trees, and with an unlimited number of uncertainties in the current economy, it's not surprising that an ever-growing number of Canadians rely on short-term loans, also known as payday loans, to handle unexpected financial needs. Almost two million people use them annually.

But while they help immediately bridge shortfalls, many borrowers must grasp the full spectrum of their bottom-line costs. A 2016 survey by the Financial Consumer Agency of Canada noted that only around 45% of borrowers knew short-term loans were more expensive than alternatives.

Though, that's just part of the story; as per that same survey, 60% of participants had no access to credit cards—and 88% had no access to a line of credit. So, while some may be unaware of the options, others may have been ineligible for standard credit.

So how do they work?

Unlike many other types of loans, there is an almost abysmal margin of error regarding approval. Bank loans often require too much work, take too long, or require the borrower to have assets or a credit score that they don't have. Most of the time, all you need to get a payday loan is a few recent paystubs and permission to take the money out of your bank account. Most loans have fees of $15–$17 per $100 borrowed and terms of 14–30 days, depending on when you get paid (an annual interest rate of just over 40%).

How can they pose a problem for some?

The problem is that if something unexpected and unavoidable happens before the money gets repaid, they risk not being able to make the payment, which could cost them a lot of money in late fees and NSF fees from their bank. Thus, they enter into a trap of sorts, playing a game of catch-up that requires them to use their paycheck to pay off loans and take additional loans to pay off bills and monthly essentials.

Yes, other options exist.

About half of all people who borrow money have little, or no cash saved, and about a quarter have at least $1,500. It's not hard to understand why payday loans are a popular option. However, there are other options—especially if you consider almost half of all short-term loans pay for unexpected costs like car repairs.

LendCare, for example, offers flexible financing (with longer payback periods) that helps break up the cost of major auto repairs, medical emergencies, or veterinary visits into smaller, easier-to-handle chunks. Borrowers can apply at any time, on any device, from the comfort of their own homes.

While financial shortfalls are unavoidable, LendCare is here to help.