ELIMINATING SOME PAYDAY LOAN MYTHS

There can be some untruths which circulate regarding payday loans, giving them a negative reputation despite being an extremely viable way for you to obtain some short-term credit. However, it can be difficult to distinguish what is right from wrong, and so this article will help you to gain progress in debunking some of the myths which surround payday loans once and for all.

Payday loans exclusively target those who are in debt. Opting for a payday loan in order to pay off other lenders can be an exceptionally bad idea – and payday loans (companies which have many well-educated executives at the helm), advise strongly against taking out short-term credit for debt consolidation purposes. Taking on customers who have an inability to pay can be as much of a danger for the payday loan company as the borrower themselves, as the lender could lose money in the event of a lack of repayment.

Payday loan companies are free to do whatever they like. This is certainly not the case and even though the practice of short-term lending is not scrutinised through a regulatory body, there have been instances where the Office of Fair Trading (or the OFT for short) have conducted investigations into businesses that have been accused of misconduct. Some businesses choose to be accredited with associations that have strict rules concerning the standard of service which lenders must provide.

Borrowers can be entitled to the maximum amount of credit immediately. Even though this might be the case with some companies, it can be perceived as a risk in other businesses who like to begin to trust their borrowers before offering them higher amounts to borrow. This can incentivise borrowers to pay on time and generally simplify the process for everyone concerned.

You can only take out a repayment period of one month. Even though many payday loans are only taken until the next payday that the borrower has, there are some companies which are offering for the amount borrowed to be paid over two or even three paydays instead of the usual one. This can be convenient as it prevents a large proportion of a person’s salary from being wiped out because of repaying the money which they borrowed prior to being paid. This option does not come without its advantages: for example, the interest rates can generally be higher with these services in particular.

Payday loans are full of hidden charges. There are plenty of companies which are up-front and honest about the fees which they charge their customers; interest rates can typically displayed very clearly on the front page. Looking for companies that do this and ensure you are fully aware of the commitment you are making can be a great help to you, so bear this in mind.

It can be awfully confusing when you are hearing all sorts of bad things about payday loans. Just like anything else, there can be some things which give this form of short-term credit a bad name – you just need to distinguish the good from the bad, and it can be easier than you think.