Pay day loans are short-term loans that are intended to help you cover your bills until you get your next paycheck. You have probably heard a lot of things about these loans that are not true.
Below are some of the common myths about payday loans:
Myth: Pay Day Loans Ruin Your Credit
Taking out a cash advance will not have a negative impact on your credit. Payday lenders typically do not even check your credit. However, if you miss a payment, then your credit score will be negatively impacted. That is why you want to make sure that you pay your loan back on time. You will get a positive report sent to the credit bureaus if you pay the loan back on or before its due date. Therefore, you can potentially build up your credit by taking out a payday loan.
Myth: Payday Loans Have Very High Interests Rates
The interest rate of a payday loan can vary, depending on the loan amount. However, payday loans have very reasonable interest rates. The only way that you will end up paying an extremely high interest rate is if you allow the loan to roll over several times.
Myth: You Have To Be Employed To Get A Payday Loan
Many lenders will approve you for a loan if you do not have a job. You just need to have a way to pay the loan back on time.
Myth: Payday Loans Are Designed to Take Advantage Of The Poor
Most people who take out a payday loan are middle-income earners. Some people who take out a payday loan are also active in the military. Payday loans are designed for hard-working people who are simply in need of short-term funds.
Myth: Payday Loans Will Cause You To Get Into Debt
It is important to remember that payday loans were never meant to be a long-term solution. Most people who take out a payday loan only do so once a year. It is also important to note that regulations have been put in place by many lenders that will limit the amount of times that a loan can be rolled over, which makes it even harder for people to fall into debt.
Myth: The World Will Be Better Off If Payday Loan Companies Would Go Out Of Business
Pay day loans make it possible for hard-working people to pay their bills when their funds are low. If all of the payday loan companies would go out of business, then people would be forced to deplete their savings account, write bad checks or simply pay their bills late. All of those options would create more debt for the person in the long run.
Myth: Payday Loans Have Hidden Fees
All lenders are required to clearly outline the rates and fees of the loan. Everything that you need to know about the loan will be given in the terms of agreement.