Many people are wary about payday loan firms taking advantage of their situation for one cause or another. This opinion is based on the fact that there are numerous myths that exist but manage to harm the reputation of payday loans despite not being true. Let’s examine each of these myths in further depth and attempt to disprove them all.
Enormous Interest Rates
The idea that payday loan interest rates are totally unaffordable is a widespread one. Given the substantial risk of non-return, the indicator will undoubtedly be higher than that of banks. In contrast to payday loans, which are often granted for a shorter time, consumer loans are granted for a period of more than a year. Thus, comparing bank rates to payday loans is not the best course of action.
The Borrower Gets Trapped in a Money Pit
This myth is closely related to the one before it. The majority of people think that high-interest rates will lead to an unfathomable amount of debt that will be hard to pay off for years and years. It does not, however, reflect reality in any way. Customers who take out payday loans frequently can avoid mounting debt, deal with unforeseen circumstances, and repay the borrowed money on time.
The Aggressiveness of the Collectors
Many people considering taking out loans ponder what might occur if they are unable to repay the bill. Some anticipate bailiffs becoming involved in the debt-collection process, or they see nonstop phone calls. In truth, payday lending organizations frequently use third-party collector agencies in the event of late payments. There is nothing to be wary about because those businesses will only use authorized methods to collect the debt.
Everyone Can Get Payday Loans
Although it is rather simple to be authorized for a payday loan, some applications are turned down. Following are a few reasons a lender could not be qualified to accept a payday loan:
- Younger than 18 years old
- Being unable to provide evidence of income
- Possessing unpaid loans
- Transferring money to gambling sites for payments
- Not having a checking account
Payday Loans are Only Used by People Who Lack Financial Literacy
To be financially literate, one must take out loans, but one must do it carefully. As a result, most customers who use payday loan organizations are aware of their financial status and realize that a quick loan can help them find a way out of their current predicament.
The Loans Are Only for Short Term Periods
While some organizations that offer payday loans focus on short-term lending, other businesses offer a longer timeframe. Additionally, if you are a consistent customer with a track record of responsibly borrowing and repaying the money, you may frequently anticipate greater loan amounts and extended deadlines. Payday loans are more comparable to consumer loans because of these terms, but they are quicker and easier to get.