During the last couples of years, the popularity of payday loans has increased tremendously, yet this increase in popularity has also brought along a wide variety of controversies, surrounding the market.
For those who do not know, payday loans represent a type of loan which is often used by people to get access to emergency funds, whenever they face a financial difficulty. The concept behind it is to give customers access to a few hundred dollars, before they get their next pay check. Based on this aspect, eligibility depends on being currently employed with either a part-time or fulltime job, as long as it is stable. Therefore, most payday loan agency will not conduct a credit check before giving you access to the loan. Other eligibility conditions include being at least 18 years old, and of course, being legally able to sign a binding contract.
Not only this, but there are numerous other benefits surrounding payday loans, such as the fact that people can learn to better budget by getting access to a payday loan. Not only this, but the funds are also transferred fast, which means that you can get access to your funds within a couple of hours, which is great news from all the points of view. Not only this, but the period of time that it takes to be accepted ranges from a few minutes, to a couple of hours at most. There is also some flexibility surrounding payday loans, which means that clients are allowed to negotiate the terms of the contract from time to time, with the agency, which is also great news.
By this moment, you may be wondering what the controversies surrounding payday loans are, and which are true. Without further ado, here are the main controversies surrounding the payday loans market, and why they are false:
1. Payday loan agencies charge insanely high interest rates
It is worth pointing out that the interest rates are usually a bit higher when compared to personal loans that you can get from banks. This is mostly due to the fact that no credit check is required, the delivery of the funds only takes a few hours, the documents that you need to provide are few, and the fact that the sums being offered are generally low, and are bound to be paid back within a couple of days or weeks, which is a practice that most banks do not offer, as they’d be losing money in the long run. Indeed, the rates are a bit higher, but they aren’t insanely high. In fact, anyone scoring a payday loan should be able to pay the funds back, alongside with the interest with ease, regardless of the size of their pay check, which is great.
2. Payday loan agencies are the modern-day loan sharks
Competitors on the market often say that payday loan agencies are the modern day loan sharks. Nothing more false. Agencies do not use violent practices in order to pursue clients to give the money and the interest fees back. Based on this, if there is no will from the client to reimburse the funds, then most agencies will simply initiate a civil lawsuit and get things over it. There are no practices such as violence, blackmail, or anything else of the matter, thus why this myth is also false from all the points of view.
3. Taking a payday loan puts you on the road of living pay check by pay check
Just like the other myths outlined above, this one is also false, considering the fact that payday loans actually teach people to better manage their funds. Not only this, but most agencies will advise clients to not spend all of their funds too fast, and come back from more. There is a chance of entering a vicious cycle of living pay check by pay check, but the chances of this happening to a sane person that only needed a payday loan in order to deal with an emergency are practically non-existent. There are of course those who spend their money way too fast, and attempt to get loans on a monthly basis, yet the percentage of the clients who actually do this is extremely low. After all, agencies will not force anyone to come back for another loan. It all depends on the psychology of the customers, and their budgetary choices.
Based on everything that has been outlined so far, we hope that we have managed to carefully debunk most of the myths surrounding payday loans. With this in mind, whenever you face a financial emergency, rather than borrowing money from friends and family and risking your relationship, taking a payday loan may be a lot wiser, from numerous points of view, therefore, don’t be afraid!