A payday loan provides an excellent solution for individuals who need fast cash for emergencies. This type of loan is gaining popularity because of how quickly lenders grant money to borrowers.
However, others are not too keen on payday loans. They look at the concept as a scheme to trap borrowers into more debts. This, in turn, sparks myths that damage the image of what’s supposed to be an efficient way to get cash in case of unexpected expenses.
What’s your perception of payday loans? Have you ever heard of a myth that made you think twice about borrowing? Listed below are some of the myths against payday loans, debunked!
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Myth 1: Applying for a Payday Loan is Complicated
Today, most lending companies offer payday loans online, which reduces the hassle of dealing with piles of paperwork and long lines. Applying for a payday loan is so fast and easy that you can even register at home and on any device. Plus, the approval of loans can take only a few minutes, so you can expect your emergency funds to be transferred to your bank account in no time at all.
Myth 2: Only People With Good Credit Scores Can Apply
Borrowers apply for payday loans because lenders usually forgo looking into credit scores. Since payday loans come with short-term agreements, there is no need to look at your credit history. Your age, source of income, and an active bank account are important criteria you need to meet.
Myth 3: Lenders Want You to Take Out More Loans
If you’ve heard about this myth before, you probably never even dared to search for the “best payday loans near me” on search engines out of fear.
Nothing could be farther from the truth than this myth. Most lenders don’t work on a commission basis for this type of loan. So they won’t benefit from a borrower taking out more payday loans from the company. Lenders want to be paid back as soon as possible, with interest, to move on to the next person in need.
Myth 4: Payday Loans Are for Poor People Only
Having a regular source of income is vital for the approval of payday loans because of their short repayment terms. If you are struggling financially and don’t have a steady income, you will have a hard time getting applications approved. This factor in itself debunks this myth effectively.
Payday loans are for people to get emergency funds in between paychecks. They are not a means to increase income. Borrowers should have the ability to repay the lender when payday comes.
Myth 5: These Loans Trap Borrowers in Debt
Licensed lending companies look at borrowers’ ability to pay back before approving a loan. This is why it’s crucial to prove your monthly source of income, as this will let lenders know that you can repay immediately. You won’t have to fall into any debt traps if you pay your loan on time.
Lenders don’t trick borrowers into getting a payday loan. Before getting approved, borrowers have to apply and meet the requirements. In Ontario, the Payday Loans Act aids in protecting those who take on payday loans. Meanwhile, British Columbia has regulations to ensure borrowers are safe from any malicious acts from lenders.
Payday Loans Provide a Helping Hand
Payday loans provide cash for unexpected expenses, like a rush to the emergency room or damaged property. It’s a short-term loan that acts as a helpful financial substitute until the next paycheck comes.
Unfortunately, unaccredited or malicious lenders may take advantage of such a concept, rousing many misconceptions that hinder potential borrowers from seeking help. So it is crucial to remember that legitimate lending companies only approve loans if they know you can pay them back. This fact allows you to avoid any debt trap in the future.
Fortunately, you can easily debunk any myths against payday loans online. When you research, always look for reviews and years of experience before applying for this type of loan from a lending company. You can filter the bad from the good to avoid encountering deceptive lenders and other stress apart from the emergency you’re dealing with.