5 Misconceptions of the PayDay Loan
Payday loans have a bad reputation as being an inappropriate financial decision. With high interest rates hidden out of sight and appealing extended pay back rates many people are encouraged to borrow more than they can repay. Here is a breakdown of a few misconceptions about the traditional payback loan.
- Anyone can get one. The truth is, while payday loans are easier to get than other loan options not everyone is approved. Every lender has a bit of risk when lending and no loan provider will loan to borrowers who are unfit to repay, no matter how high the interest rates spike. Just because you have a job doesn’t mean you’re automatically approved for a payday loan.
- It’s not a bad credit personal loan. A payday loan is not the same as a personal line of credit with high interest. The interest rate is not the only determining factor in the definition of a payday loan. A pay day loan doesn’t show on your credit report like a bad credit personal loan will.
- The interest rates are high but do vary. While the interest rates for pay day loans are considerably higher than most other options, you can find quite a bit of variance. Many different loan providers offer slightly different rates so you can shop around.
- You can avail a loan. To avail a loan against your monthly earnings is to add a layer of protection for borrowing and repayment of the loan. This is one way to ensure that you can borrow more responsibly. However, many people don’t know that this is an option.
- It’s not only for the low-class. Middle class and upper class society members can take advantage of payday loans in times of financial distress and it’s not just for poorer community members.