There is no denying that payday loans remain one of the most popular loan types in the UK today. Right now, there are hundreds of thousands borrowing money from payday lenders and that number will increase as finances get tougher. That doesn’t mean to say, however, every borrower or potential borrower is happy with what they perceive payday loans to be. There are some myths which are causing a lot of concern amongst borrowers. The following are top seven myths for payday loans which you might want to debunk.
Borrowers will Find Added Charges onto Their Loan Account
A lot of borrowers believe if they take out a payday loan, they will be stuck with additional charges on top of the original loan amount and standard loan fee. However, if you are dealing with an ethical payday company there will be no additional charges put onto the loan account—unless you default or miss a payment. If you were to miss a payment or roll the loan over to the next month then there will be another fee on top and the interest might also increase. However, putting these issues to the side, if you pay the loan back when agreed upon, there will be no additional charges. Most payday loan lenders do not add unnecessary charges to accounts.
Once you take Out a Payday Loan, You’re stuck For Life
Let’s be honest, everyone believes that once a payday loan is issued in your name, that’s it, they are stuck with it for the next fifty years but that really isn’t the case. For most borrowers they have the ability to borrow money and repay the loan back at their next payday and when that happens, the loan is gone. As soon as the loan amount, plus interest is paid for, the loan is paid back and that’s it, you don’t need to have any more dealings with the lender. Payday loans don’t stick with you forever.
Payday Lenders Are Loan Sharks
Legitimate payday lenders are not loan sharks. Yes, there are lots of loan sharks out there but they do not operate a legitimate business. It is always advisable to research the payday loan lenders you’re thinking about choosing to ensure they are honest and legitimate. Avoiding a loan shark is only really possible by doing your homework before you borrow money. There are sharks out there but not every payday loan lender is a shark.
Interest Rates will Constantly Be High
In a way, some interest rates can be higher than others depending on the lender you choose. Some lenders will charge a higher interest while others a more reasonable rate. In truth, it will come down to the lender you choose and the amount you require as well. Of course, if you are taking on several payday loans at once then you will often find you get yourself in a bit of a tangle and it’s not advisable to do.
Lenders Encourage Borrowers to Borrow More
There is a thought that once you approach a payday lender, they will constantly pester and bother you to take out a loan. While some lenders can be like that, payday lenders aren’t. In truth, lenders know if someone needs to borrow money they are more likely to go back to the person they borrowed from before. If they bother customers, past or current, they won’t get their custom again and that means losing money. Payday loan lenders are smarter than that.
Constant Calls by Lenders to Get Their Money Back
Surprisingly, payday lenders aren’t going to waste their time pestering you for payment. If you are making payments on time then you probably won’t get bothered by the lender as they are happy enough to be receiving your money. However, if you default, you may get a lender calling requesting payment. If you don’t pay, the lender can turn the debt over to a collection agency and they won’t actually be the ones bothering you. Payday loans are useful but, in most cases, lenders won’t bother individuals if they’re making payments.
Payday Lenders Are Targeting the Poorest
It’s easy to see why so many believe that a payday lender targets the people who are at the most risk such as those out of work and the poorest of the community. However, anyone and everyone can use a payday loan. Remember, they are short-term loans and they are aimed at those who don’t have the ability to get a standard loan because of poor credit but also those who want to borrow money on a short-term basis. It doesn’t necessarily target the poorest but rather all those who want a short-term loan. Payday loan lenders want customers from all walks of life.
Debunk the Myths
There are some myths that are relevant to borrowers today as they want to ensure they are getting value for money and not going to be stuck with a loan for the next three years. However, if you can debunk some of the top myths surrounding payday loans, you might be able to understand the loans better. Payday loans aren’t always to be feared.
Read more in this link: https://www.investopedia.com/financial-edge/0112/3-tips-to-use-payday-loans.aspx