Many people frown on payday loans because of wrong ideas that they have with this kind of loan. Unfortunately, there are many myths surrounding this type of loan thus people avoid payday loans and end up suffering more financial setbacks. Here are top 15 wrong ideas with regards to it.
- Borrowers end up in a debt trap or cycle of debt – the truth is that it is quite difficult to fall into the trap when a payday loan is a very short term loan as compared with long term ones. In addition, the reality is that borrowers only end up using this kind of loan once or twice a year. So, the idea of falling into the debt trap is not realistic.
- It exploits people – the real deal is that it assists people during emergency situations or short term financial crisis when banks and other financial institutions cannot extend quick and document fewer loans.
- It operates as a loan shark company – this is a big fat lie. Loan sharks use fear, threats, and intimidation in order to collect from their borrowers. On the other hand, payday loan companies use rollovers, negotiation, and technology to ensure that loans are paid on time or settled when borrowers defaulted.
- Payday loan companies employees are rude – another big lie as companies offering this kind of loan are believers of good customer service. Thus, not only do they want to help people solve short term financial problems but also see to it that they are satisfied and will borrow again.
- It exploits poor people – how do you define poor? In the first place, one of the requirements in order to qualify for a loan is that one must have a regular job with a steady income. It doesn’t entertain poor and jobless borrowers at the same time.
- It has hidden charges – the truth is that not only payday loans are guilty of this act but even regular banks and other financial institutions have hidden charges. It is the responsibility of borrowers to read the fine prints and ask if they have questions in order to be clarified; even insurance companies are noted for this also.
- Not covered with financial regulations – in the beginning, this was the case but currently, numerous states have instituted financial regulations to protect their constituents. Besides, there are also cause-oriented groups that advocate financial freedom and are always on the lookout for abuses by instant loan companies.
- It promotes unethical practices – if you mean unethical as taking money away from hapless borrowers, surely you have it all wrong. They do not take money, instead, approve their loan request and help borrowers solve short term or temporary cash problems. According to the latest financial reports, it was found out that payday loan companies have “responsible lending” statements to inform people about the ethical practice of payday loan companies.
With all of these incorrect ideas corrected, payday loan borrowers can now relax as they are assured that they will not be exploited.
This is a sponsored post for Missouri Payday Loans, a reliable resource for payday loans, cash advance , auto title loans, check cashing, and related services in St. Louis, Missouri and nearby areas.
