Top 5 Myths Busted About Payday Loans
Myth One – Interest on Payday Loans Is Too Inflated
Possibly the most common misconception about short term loans is that they can be expensive because of their high interest rates. It’s important though, to know the context in which this interest works. Usually, the loan is only provided for a short amount of time and the amount of cash loaned is very small. APR (Annual Percentage Rate), the interest rate utilised for payday loans, is worked out in relation to the loan over a year, so the interest rate appears large in comparison to a short-term service.
I’m positive that this attribute of payday loans will always be a source of controversy, but it is not necessarily something that should put you off from taking out a short term loan. It’s a good idea just to look at the actual total that you will need to repay instead of the rate of interest to select which lender you want to take out your loan from.
Myth Two – Payday Loans Have Difficult Terms and Conditions
Another misconception is that payday loans have terms and conditions which are designed to confuse people about how much they have to repay. The truth is however, these type of loans have no hidden fees and have simple terms that anyone can understand. Several payday loan companies lay out their repayment costs in an easy way, which means that providing you can make your repayments on the arranged date, there won’t be any scary surprises.
Myth Three- People With Bad Credit Don’t Meet The Requirements
People with any credit history can apply for a short-term loan. Payday loans have overcome the potential risks involved with lending to people with a history of poor credit through having the cash loans secured against the customer’s income or wages. What’s more important to payday loans companies is your ability to repay the money, rather than any difficulties that you might have had in the past.
Myth Four – Payday Loans Are Only For Emergencies
It is a myth that these type of loans are only for unexpected situations. They can be very useful to fund anything from a small vacation to a party or gift. Even though primary reason that people take out payday loans is for emergencies, it is not always the case. In addition, many people find that they may be embarrassed to ask for cash from friends or family, so a payday loan is another choice.
Myth Five -Payday Loans Snare People In An Unending Cycle Of Financial Debt
Payday loans are just designed to be used to help you with unexpected finances, and should not be used to manage debts that you already have. As long as you have the ability to safely make your payments then there should be no complications. If you think that you wouldn’t be able to, then it is probably recommended not to apply for a payday loan in the first instance.
With all those myths busted about payday loans, more information can be found on Payday Cash Loans through Payday Plus.
Article written on behalf of Pay Day Plus, UK Payday Lender.
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