There are a lot of myths and misinformation about payday loans, so it’s important that you get your facts straight. A lot of people are very hesitant when it comes to getting one of these loans because they don’t have the correct information. When you actually take the time to actually learn the truth about these loans, you will more than likely be inclined to apply for one. If you are in a tight financial situation in need money, a payday loan can be of great help.
1. Payday Loans are Just Scams
While it’s true that there are some unscrupulous payday loan lenders who charge hidden fees with ridiculous amounts, these loans in general are not scams at all. A payday loan is just a short-term loan that you pay back within a couple of weeks after receiving your money. As long as you pay back the money you borrow on time, you shouldn’t have any problems at all. These lenders are not held to the same regulations and rules as banks and credit unions, but that doesn’t mean that they are all out to scam you.
2. Payday Loans Always Result in an Endless Cycle of Debt
Another common misconception about payday loans is that they cause the people who take them out to get stuck in a never ending cycle of debt. It’s true that the interest rates on these loans can be quite high, but you are never allowed to borrow more than you’re able to pay back with your next paycheck. Just make sure that you pay back the money you borrow on time and you won’t get stuck in this nightmarish cycle. The reason that this myth was born in the first place is because of people who failed to pay back their loan on time, so you don’t want to make that mistake.
3. Taking Out a Payday Loan Negatively Affects Your Credit
The fact is that just taking out a payday loan cannot negatively affect your credit score at all, so that isn’t something you will have to worry about. If you are late paying back your loan or choose not to pay it back at all, however, your credit will likely suffer as a direct result. You will need to make a point of getting your loan paid back on time so you don’t experience this particular issue. You do not want a big negative mark on your credit because you didn’t pay your loan back. Paying back your loan late is better than not at all when it comes to your credit.
4. All Payday Loan Lenders Charge Ridiculously High Interest Rates
You will find that interest rates with payday loans are usually higher than most other kinds of loans, but that doesn’t mean they are always ridiculously high. The interest rate that you pay on your loan will depend on a few different things, including where you live, the lender you choose to borrow from and what your credit is like. Those with bad credit typically pay more interest than those who have good credit, so you will need to keep that in mind. You will also want to remember to ask the lender you are interest in borrowing from what your rate is going to be like before you sign a written agreement of any kind.
5. Consumers Always Have Better Options than Payday Loans
A payday loan might not always be the right option for everyone, but it can be a great solution if you are in a tight financial situation and need money right away for some important expense in your life. When you actually take a look at all of the benefits that are associated with payday loans, you will quickly realize why so many people take them out. There are quite a few good things about getting a payday loan, such as that it will most likely be easy for you to get and you’ll receive your funds soon after you are approved. Whether or not a payday loan is the best option for you will depend on your specific situation, so you will need to evaluate everything before making a decision.