In the past ten years, payday loans, both as an industry as well as a medium of lending have seen tremendous and exponential growth. In most of the countries payday loan lenders have started gaining momentum as well as respect compared to past years. However, there still are a few misconceptions surrounding these loans. Let’s have a look at them:
Payday loan lenders target people who are vulnerable and weak
A few years ago regulations pertaining to payday loans were not as strict as they are today. Some lenders did misuse the loans by providing them to people who would not be able to pay back. They purposely gave them loans and later piled up the interest and made a profit this way. However, nowadays these loans have become quite popular and many legit online firms have come into being. In UK, Financial Conduct Authority regulates payday loans. Due to the new regulations, many lenders who previously targeted people have stopped doing so.
Payday loan lenders hide the fees and actual interest rate
This is another misconception which comes to payday loans. Many people think that payday loan lenders hide the actual fees and interest rate. There is a misconception that they hide all this earlier and make the person pay more fee and interest after the loan is taken, due to which the consumer falls into debt. Many fraud online firms may do so. While taking a loan one must be clear about which firm to approach. One must choose wisely and opt for legit firms.
Payday loans make customers fall into continuous debt
Many people think that payday loans lead them to unending spiral of debt. If you are unable to repay the loan then it would obviously lead to debt. However, in modern days due to regulations, firms do not provide loans to anyone who will be ineligible to repay it. While providing the loans they check the income of the customer and provide the loan accordingly. Now lenders do not approve loans as easily as they did in the past.
Payday loans always have high interest rates
This is one of the most common myths. In the past years some lenders used to exploit the customers who needed instant money by providing very high interest rates. But as the regulation has started becoming stricter these kind of exploitation has turned into very minimal. Most of the firms have an accessible and fixed interest rate. However, while choosing a firm one has to be very careful and should not fall prey into the fake firms.
Payday loans reduce the financial issues for a long-term basis.
Payday loans can be temporary solutions to one’s monetary problems but not a permanent one. Just like any other loan in this also money has to be paid back on time. Only the interest rate and the amount of money borrowed varies. Refer to icash to know more.