Payday Loan Myths
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1. Are payday cash loans unregulated with hidden fees?
2. If I get a payday advance, will I be trapped in a cycle of debt?
3. Do payday advances take advantage of the poor, military, and minority members?
4. Are payday loans interest rates too high?
5. Are Quick Payday Loans predatory lenders?
6. What are the myths of payday loans?
7. Can I get a payday loan if I'm unemployed?
1. Are payday cash loans unregulated with hidden fees? Back to Top
This myth is incorrect. Numerous states have very succinct regulations concerning a short term payday cash loan. These states with regulatory provisions have legal consumer guides that monitor and control the maximum and minimum amounts received through a payday cash loan, as well as the length of time and interest rates.
The payday cash loan facility is required by law to disclose any application fees, interest rates and other fees. According to the Truth In Lending Act, it is a legal requirement that all fees and rates must be clearly outlined and disclosed to the customer. However, it is important to realize that a payday cash loan institution is not a bank or credit facility.
State boards have also helped in creating and maintaining payday cash loan regulations which can satisfy the immediate emergency needs of American families. If you find that a local or web-based payday cash loan institution is not adhering to your state regulations, please contact your local police department.
2. If I get a payday advance, will I be trapped in a cycle of debt? Back to Top
It's important to understand that payday advances are not meant to be a long term loan. It is not meant to function as a credit card or bank loan. What a payday advance has done is assist millions of American families with emergency needs. This means that a payday advance is given only under the agreement that it will be paid off on the applicant’s next payday (hence the term, payday advance).
Regulations have been pushed to allow payday advances to be rolled over, but not indefinitely. This will help to keep the payday advance applicant from being stuck in a long term, high interest rate loan. Furthermore, the upper majority of applicants use a payday advance yearly, rather than monthly. This is less than the number of people who bounce checks to overcome an immediate family emergency that may arise. A bounced check costs at least $25 from the bank, regardless of the amount of the check. Thus, a payday advance is a more economical option than bouncing a check.
3. Do payday advances take advantage of the poor, military, and minority members? Back to Top
Payday loans do not attempt to take advantage of any particular demographic, including military personnel. Payday advances are marketed toward subprime clients without a distinction in employment or culture. In fact, payday loans are marketed toward middle-income people. Most payday advance members are under 45 years old and most payday advance applicants are currently employed with a steady income and have an active checking account. In reality, payday advances are meant for hard working adults with an immediate emergency need that cannot be satisfied through bank and union loans.
The fact is that a payday loan is marketed and supported by middle class customers who have continuous employment, an active checking account and need emergency funds until their next payday. Payday advances are not meant for persons who cannot afford to remit payment on the payday advance.
4. Are payday loans interest rates too high? Back to Top
A payday loan does have high interest rates. This is not because the lender is trying to take advantage of emergencies, but because they are a short term lender. A short term cash advance via payday loans can average 15 to 30 percent interest over a maximum of three weeks. A long term credit card or bank loan averages 7 percent interest over several years or longer. The payday loans are meant to be short term loans, not long term loans that are constantly refinanced with monthly statements. This means that the payday loan company assumes greater risk at the same profit level as other financial institutions.
A payday loan provided by a reputable payday loan or cash advance company does not take advantage of people. It is meant to be used only for a short term emergency situation by employed persons who need a little bit of help between paydays for emergencies. This is a very common occurrence when most families live paycheck to paycheck and may not be financially prepared for emergency repairs, travel or medical expenses.
5. Are Quick Payday Loans predatory lenders? Back to Top
In reality, quick payday loans fill a necessary component in the economic world. Considering that most middle class people are in credit card debt already, it often becomes impossible for them to receive emergency quick cash for emergencies, medical expenses or other needs that may arise between payday. Furthermore, since quick payday loans are only short term cash advances that are not based on your credit, this adds an additional service to the middle class person.
The problem is that people and organizations have a tendency to focus on the interest rates. At first glance, the interest rates may seem high. So, consider that a person needs an immediate loan of $100. Their options are to place the $100 on a credit card with a high interest rate or to take out a quick payday loan with a sometimes higher interest rate. Now, most people do not pay their credit card balance in full when it is due. They only pay the minimum balance, which covers the interest rate. This can take a very long time to pay off the full amount. With a quick payday loan, the additional fee does not accumulate past the payment remittance date unless you decide to re-submit for another payday loan, which is not recommended in quick payday loans. Also, there are no annual or hidden fees with quick payday loans. This is less predatory than credit cards who alter interest rates and apply hidden overcharge and hidden annual fees to the credit card. However, it is important to understand that quick payday loans are NOT credit cards. They should not be used as credit cards, but only used for immediate emergency needs.
6. What are the myths of payday loans? Back to Top
When it comes to a payday loan, there are many myths that are out there that can discourage people from taking advantage of a such a simple cash solution. In reality, payday loans can be an affordable option to the costly alternatives of not having emergency cash on hand.
For example, one of these payday loan myths is that the interest rates are extremely high. This is not so. Rates are reasonable percentages for the short term of the loan. The only way this myth becomes true is if you allow it to become true. If you allow a small loan to roll over many times because you have not been responsible in repaying it quickly as required, you may end up paying more in interest to keep the loan active.
Another myth is that your credit will somehow be adversely affected. The only way your credit is affected one way or another is through credit checks. Credit checks can lower your score if you’re not careful. Payday loans require no credit check. Therefore you do not have to worry about anyone meddling with your credit.
Payday loans online are designed to give you extra money when times are tight. Regardless of the myths, go to CashLoanSource.com and make your own educated decision on whether a payday loan is right for you. You may be surprised at how useful a payday loan can be!
7. Can I get a payday loan if I'm unemployed? Back to Top
For most long-term loans, such as mortgages and car loans, you have to prove you have a source of income to make your monthly payments. Not so with a payday loan! Since the loan is for the short-term, the lender will provide you with the money without necessarily verifying your employment.
There is the myth that you have to be employed to enjoy the benefits of a payday loan. In reality, there are many lenders that will loan to people that are unemployed, as long as they have other means to guarantee repayment of this short term loan.
Apply with CashLoanSource.com to see if you can secure a payday loan for quick cash.
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