Payday Loans Myths

H2: Information about payday loans abounds; however, you need to make sure you are getting facts to know how these types of loans can help you.

Payday loans assist employed individuals to get short-term loan during emergencies. It helps them get through until the next payday. A majority of the working population has taken out a payday loan at least once in their lives. There are several ways to get payday loans since there are hundreds of payday loan lenders out there. This type of loan is easy to get: money is deposited within 24 hours with no complicated paper works. Employed individuals usually take out online payday loan since it is more convenient for them and they do not have to go out of the office. But bear in mind that a payday loan must be paid on your next payday or depending on your contract with the lender.

There are, however, several misconceptions about payday loans, and the reason for this is because most people would rather listen to hearsay rather than get the information themselves. Let us try to clear out some of the misconceptions.

  • Payday loan lenders do not charge interest rates that will put the borrower in a pit. In reality, payday loan lenders charge an average of $15 per $100 borrowed. Keep in mind that payday loans are usually paid in two weeks.
  • While it is true that payday loans are usually used for emergency situations, most people also take out payday loans to pay utility bills and even for vacations.
  • It is also untrue that payday loans are for individuals with low income. Whatever your financial situation may be, there may come a time when you will need to take out payday loans. And there are surveys that will tell you most individuals have taken out such a loan.
  • Payday loans benefit both the lender and the borrower as opposed to what people believe. As a lender, you get interest for the money you lend. And as a borrower, you get the money you need within 24 hours, without the hassle of providing complicated documents.
  • Contrary to common belief, payday loan lenders are not in the business to make huge profits by charging high interest rates. When you compare payday loans to other types of loans, payday loan lenders earn less when it comes to profitability.
  • Payday loan lenders do not and cannot hide fees. They are required full disclosure of their company’s terms and conditions. They have to be upfront regarding interest rates and other charges.
  • Payday loan is not meant to exploit those who are already in debt. The reason why payday loan exists is because there is a demand for it. Most commercial loan lenders or banks have stopped offering the kind of loan payday loan provides, like immediate and quick release of loan and no document presentation.
  • It is incorrect to assume that payday loans cost more than paying overdraft and late fees. With a credit card, you are immediately charged with late fees if you neglect to pay the whole amount in time. Additionally, you normally do not have the slightest idea how much the late charges would be. With a payday loan, you are informed upfront of the rate, which is a one-time flat rate before you sign the contract.

It is important to get all the facts straight before jumping to conclusions. These myths may hinder you from making wise financial decisions.