Tons of misconceptions surround payday loans, some that prevent people from applying for this type of loan in their time of need. They’re unaware that it is a misconception, of course, but it nonetheless continues to keep them in the financial bind that brought them to need the loan in the first place.
Don’t allow misconceptions stop you from getting a loan in the time of need. Let’s look at some of the most common cash advance loan misconceptions and the truth behind the matter.
1. Only Poor People Use Payday Loans
Statistics show most payday loan recipients are working, middle-class families who’ve simply encountered a financial hardship in their lives. Loans put cash in the borrower’s hands fast, sometimes the very same day as they apply. It’s one of the fastest types of loans available today!
2. You Pay Hidden Fees
Some people think payday loan lenders add hidden fees into the repayment amount for borrowers, but this is untrue. This practice is illegal and something any legitimate lender avoids at all costs. Your loan agreement contains details of the fees associated with the payday loan.
3. It’s Cheaper to Pay Overdraft Fees
Bouncing a check, as its often called, occurs when a person writes a check to a person when the available funds are not in the account. Overdraft protection allows many transactions to go through, but it comes at a cost. Most banks charge about $50 per overdraft, which can lead to massive costs with one or two checks.
4. You Need Good Credit
One reason people use payday loans is because they have bad or no credit. Getting a loan approval without credit or with bad credit looming over your head is not easy with some lenders. Payday loans require no credit check in most cases, so you’ll get approved regardless of your credit score or past credit mishaps.
5. Payday Loans are ‘Money Traps’
Lenders do not offer loans with hopes that borrowers cannot repay the money. They’d quickly go out of business if everyone did this! The higher than average interest rates account for the added risks that lenders take using their loan methods- -and the inflated fees they pay for taking the risk.
Financial hardship happens to the best of us. If it happens in your life, payday loans provide fast cash in the time of need. Don’t allow misconceptions stop you form getting help when its needed! The myths above are among many surrounding payday loans. Learn more about this loan type and remember, never believe everything that you hear!