What are the most widely believed notions about payday loans?

by Anna Rose Blogger

The myths and misconceptions are rife when it comes to payday loans and lenders. But the truth is that payday loans are not as harmful as most people think of them. The key to avoiding any hassles here lies in making sure that you are educated and able to handle the payment when the time comes. The following are the most widely believed notions about payday loans. Some of these are nothing, but myths and some of these have a grain of truth in it. So, read on to find out more about payday loans.

Payday loans are only for the poor and struggling

If you look at it statistically, then you will notice that the middle-class people with salaried, full-time jobs are the most common contenders of payday loans. Lenders usually look for proof of income and an active bank account before lending the money. Payday loans are meant to cover issues that come up in between paycheck and such emergencies can occur for anyone.

Payday lenders charge high rates of interest

The truth here is that payday loans are quite expensive to administer. The lenders need to account for the costs of defaulted loans, along with running a business. Keep in mind that the lenders are offering you a service, and it makes sense that you pay a fee for using it. The average profit margin for a payday lender is around three per cent, and that justifies the rates of interest they charge.

Payday lenders levy hidden charges on loans

It is legally binding for all lenders to be forthcoming and upfront about the fees. The fees have to be outlined in your lending agreement in detail. There will be only one fee, with no added interests or hidden costs. Additional charges get levied when a customer defaults on the payment, but even that is clearly mentioned in the loan agreement.

You need a good credit score for being eligible

The best thing about an instant payday loan is that you can get it even without having excellent credit scores. It helps to have a good credit score, but it is not a requisite. You should be good to go if you have a bank account and a usable income. The fact is that the lenders want to know if you have the ability to pay back the loan and credit scores do not really play a big part in it.

Payday lenders are here to help you and not land you in financial trouble. Though you should not resort to using a payday loan regularly, using them when you need it urgently will not ruin your financial condition.

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Created on May 24th 2019 07:26. Viewed 218 times.

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