Payday loans are perceived to be harsh , not because of how they can be taken, but how they can be returned. Due to the general misconceptions, people tend to fear them and in turn avoid them without finding out the right information. We’ll clear these myths so that it becomes easy for people to not only understand payday loans but what the right process is to take them out. Here is all the information you need.
What are Payday Loans?
It is easy to understand why people are equally fascinated and afraid of payday loans. The reason they are known as payday loans is because they need to be returned within a month, as the name suggests, on the next payday. This means that they are the easiest short-term loans available in the market.
They are equally great for the lender and borrower. For borrowers, it becomes easy to get hands on payday loans in times of emergencies or crisis, because there is no lengthy procedure involved. So long as you are of legal age, have proof of identity and can get to the right lender, you can have access to your payday loan within a short few hours or 24 hours at the most. People who have bad credit score or some kind of bad credit history can also take the loan without any worry.
As far as the lender is concerned, they do not need to worry about their money getting stuck with the borrower as the time of repayment mostly is no more than a month. Studies show that more and more people are opting for payday loans both as lenders and borrowers. As per stats there are approximately 200 payday lenders currently doing business in UK alone. This depicts the credibility as well as the progress of payday loans and loan repayment industry.
In simple words, payday loans are not something to be worried about so long as you know what needs to be done and how they should be repaid. Here are some common misconceptions surrounding payday loans in UK.
The Loaners Capture Vulnerable Borrowers
This is one of the most common delusion people have about lenders who are giving away payday loans. This is an assumption that came up because payday loans are available to everyone, irrespective of what their credit history maybe like and whether or not they already have loans. But the reason why payday loans are easily approved is because they have early return policy and because their interest rate is higher as compared to normal loans.
Interest Rates are Exorbitant
It is true that the interest rates of payday loans are high, but this most certainly does not mean that they are over the market or unjustified. The thing is that interest rate of payday loans is 15% in most cases but since you have to make the return within a month, the money does not increase to the point where it becomes unmanageable. Within one month the rate does not get too much.
What’s more, you do have the choice of rolling over the debt in case you are unable to pay at the end of the one month’s period. This allows for the borrower to get one more month to repay the money with convenience. Also, even better is the fact that payday lenders will not be on your back about the payment of these loans nor will they harass you over the phone, like other kind of lenders in the market.
Hidden Agendas and Fees
One of the myths circulating about payday loans is that the reason they are so easy to gain and are so flexible when it comes to rules and regulations is that they have some kind of hidden agendas and fees. According to the law , payday lenders are required to expose all kinds of fees, interest rates, as well as rules and regulations before giving any kind of loan. This means that the borrower would know from the very start what they are getting into and what will be the total amount they would have to pay at the end of a month.
There are no indeterminable small print nor any hidden fee structure that you discover once you are trying to pay back the money you borrowed.
Mostly Leads to Bankruptcy
This is another common misconception about payday loans. People tend to believe that once they have taken payday loans, they will get involved in the process of trying to pay off the money each month without success. This is about as wrong as it could get. Why? Because if you have a plan of action set, you will easily be able to pay the money at the start of the new payday. Bankruptcy only surfaces when you are not I control of your financial conditions.
The thing to keep in mind is that payday loans are a choice. You don’t have to get them if you feel that you won’t be able to manage the return. But they are the solution for many people in times of crisis when other sources of getting money are exhausted.
The process and idea of payday loan is one of ease and comfort. Imagine being in a situation where you are in dire need to immediate cash and banks refuse. This is the time when payday loans can help resolve any kind of emergency. More and more people are opting for payday loans for this prime reason. If you want to find out more about payday loans, the procedures and comparisons of different lenders in the market, you can find out all the information here.