As a result of the economic turmoil, many people have turned to pay day loans. The reason for this is simple. Many people with low incomes and poor credit scores simply can’t qualify for traditional financing options.
And that means they need to turn to alternative funding sources such as payday loans or cash advances. However, the truth is that there are some myths surrounding these types of loans. Here are five myths about payday loans you should be aware of.
Myth #1: They Are Only Good For Emergency Financing
The reality is that most payday lenders will offer short-term loans up to $1000-$1500. In fact, according to PayDayLoans.org, most payday loan borrowers use their loans for things like groceries, gas, utilities, and health care.
In other words, it’s not just emergency funding that these loans provide. Rather, they are used for any type of financial need that requires immediate funds. If you need more information on how to apply for a payday loan, visit our guide here.
Myth #2: You Can Get A Loan With Bad Credit
While you may think that bad credit makes it difficult to get a payday loan, that isn’t actually true. In fact, in the past year alone, over 1 million Americans obtained payday loans with bad credit.
Payday lenders work with customers with all kinds of credit histories, including those who have had bankruptcy filings, foreclosure proceedings, repossessions, and collections. It’s important to note, though, that if your credit history is very poor, you may want to seek out an alternate form of credit. Also, we suggest checking your local laws before applying for a payday loan.
Myth #3: You Can Qualify For A Payday Loan Through Your Employer
Many employers offer employee assistance programs (EAPs) that allow employees to obtain payday loans at no cost to them. This is great news because it eliminates the need to borrow from a third party lender. However, even if your employer offers an EAP, you’ll still need to meet certain qualifications. One of the requirements is that you must already have a job. Another requirement is that you cannot be behind on your bills.
Myth #4: You Need To Be 18 Years Old To Obtain A Payday Loan
You might think that since adult payday loans are available to anyone over 18 years old, then you can also get one. Unfortunately, that’s not the case. While you can certainly apply for a payday loan online if you are above the age of 18, there are additional restrictions. For instance, you will have to show proof of income and employment. And you can only request a maximum of $500 per month.
Myth #5: There Is No Risk Involved With Using A Payday Loan
There is risk involved with using a payday loan. Not only do you run the risk of getting charged exorbitant amounts of interest when paying back your loan, but you also run the risk of being charged fees by the payday lender itself. These fees include late payment fees, return check fees, and more.
If you decide to go through with obtaining a payday loan, don’t forget to read the fine print and make sure that you understand what kind of fees you will incur if you fail to repay your loan on time. Also, remember that the length of the loan depends upon your ability to repay it. Thus, if you need a larger amount than what was originally requested, you may end up having to wait longer to receive the money needed.
With that said, if you choose to use a payday loan, don’t hesitate to ask questions whenever you feel confused. In addition, don’t be afraid to contact customer service representatives so that you can clarify any confusion you might have regarding repayment schedules.
To learn more about the truth behind the myths of payday loans, be sure to read our article here.
According to the Consumer Financial Protection Bureau (CFPB), there were 8 million payday loan accounts outstanding in 2012. That represents roughly 10% of all consumer debt that consumers owe. The average annual percentage rate (APR) for a payday loan averages 400%. As you can imagine, that’s quite a bit higher than the APR for other forms of credit.
Misconceptions are just the thought of people that they have formed regarding the specific issue. If they will plan to reach the gaols then they will surely get good amount of the results. They can visit Money-Wise.org and get the detail.A person can take some genuine steps that will give them with the favourable option that will give those profits.
However, there are ways to minimize the impact of a high APR. First, try to find a lender that charges a lower annual percentage rate. Second, consider refinancing your payday loan into another form of credit. Finally, look into the possibility of consolidating multiple payday loans into a single installment loan.