At some point in our career, we would be considering or have availed of a payday loan. One reason is to cover for something where in cash isn’t readily available at the moment we need the money. This is okay. Payday loans are good ways to make sure that your expenditures are covered during times money is not readily accessible.
Payday loans can help you with your emergency expenses and other things that you need to spend for. It is not entirely bad as with all loans, what is important is managing the debt and not abusing the capacity of eligibility for a loan. Here are a few of the misconceptions about payday loans that you might need to check on.
Annual Rates are Outrageously High
Like any other loan, interest payments are needed to allow the lender to earn from letting the borrower use their money. These interest payments are often accused to be so high when computed on an annual basis. Often times, the interest payments on long term mortgage and personal loans can be effectively higher than that on a payday loan. Operating under the governance of regulations, licensed lenders apply reasonable rates as dictated by the market.
High Credit Score is Needed
Most loans are dependent on good credit standing. This is true with mortgages, personal loans, and even business loans. But with payday loan, this is not entirely true. A licensed lender may look into your credit standing but will never be a factor in approving your loan. What is important for the lender is to establish the identity of the borrower and the capacity to pay. Once this is complete, proceeds for a payday loan is released.
Payday Loans are Scams
This is totally a myth. Payday loans actually started unregulated thus having a bad reputation of being a scam. But with the evolution of the financial industry, this has become a standard service being offered by banks and licensed lenders. Payday loans are normally reasonable loans that can be availed of now that governments are granting permit in accordance with regulations that have been established. Look for a licensed lender to ensure avoiding fraud.