Payday loans come in handy, especially during financial emergencies. The high-interest rates associated with these loans, their short-term nature, and the fact that their requirements are easy to meet and easily accessible have resulted in several misconceptions, making them appear less favorable than other loan options.
Myths About Payday
Here are four myths about payday loans debunked.
Payday loans are predatory
Traditional payday loans might have given people the impression that they’re predatory. However, this isn’t the case with the advent of online payday loans, including e-transfer payday loans.
As a borrower, you can select reputable lenders with excellent track records concerning customer service and are highly recommended by past borrowers. While you may find a few predatory payday providers online, knowing what to look for in a lender is the best way to avoid this.
A reliable payday loan lender should be regulated if the proof is most likely to be on their website. Ensure their terms and conditions are transparent, meaning you’re fully aware of the total borrowing expenses plus the repayment schedule you’re expected to follow.
The best payday lender should ensure that you, the borrower, can pay back the loan and even give you financial advice where necessary.
Payday loans create a debt cycle
Payday loans are short-term with high-interest rates, making them harder to manage than any other type of financing. This may result in a debt cycle, but only if a borrower can’t repay the loan on time.
However, learning more about the conditions surrounding these loans can help understand debt cycles better and how they occur. Payday lenders have terms, conditions, and requirements each borrower must meet.
As such, it’s your duty as a borrower to read and understand the terms and conditions of any loan offer before applying and ensure you can adhere to the set repayment terms.
Payday loans can only lead to a debt cycle if you, the borrower, keep rolling them over. Additionally, an ethical lender will evaluate your monthly income, expenses, and other financial obligations to ensure they can repay the loan. This reduces the risk of borrowers rolling over loans, preventing the creation of debt cycles.
Payday loans have many hidden charges
The belief that payday loans have hidden fees and charges is just a misconception. Reliable payday lenders will be open with their charges and rates. Upon receiving your application, a lender gets back to you with an offer showing all the costs and fees applying to the loan you want.
This ensures you know how much you’ll owe before accepting the terms. Additionally, the lender only approves your payday loan after you’ve accepted the repayment terms.
Anyone can access payday loans
While payday loans are easily accessible, not everyone is eligible. Every lender has eligibility criteria that all borrowers must meet. Nevertheless, some requirements are basic across most ethical lenders. To qualify for a payday loan, you must be at least 18, provide proof of income and valid identification, and possess an active checking account. Most lenders may require a hard credit check, primarily a borrower’s online banking history, to determine your eligibility, meaning no credit checks.
Payday loans have many misconceptions surrounding them. Consider familiarizing yourself with the debunked payday loan myths to make informed decisions regarding this type of financing.