5 Common Misconceptions about Payday Loans
Many people today are applying for payday loans. They are easy to obtain, and they can provide money in your bank account before the day is complete. You can easily apply for these loans online, and you will get some relief from your financial problems. However, you need to get the facts about payday loans before you apply for a loan. Here are five common misconceptions about payday loans.
1. The Interest Rates are Very High
Many people believe that because of the outrageous interest rate, they are not worth getting. Interest rates and extra fees are higher than traditional loans, but you are considered a risky customer. Therefore, payday loan lenders need to charge a higher interest rate. However, you can find affordable rates if you will search around and compare lenders. The rate you pay is higher because payday loans are relatively easier to obtain. You only need to be 18 years of age and a citizen of Australia, as well as possess a current bank account. Some lenders also require you to have a steady job. When payday loans were first offered, lenders made you pay enormous rates; Australia has since regulated the rates that lenders can charge, so companies have reduced the rates. The only time that the rates should be an issue is if you do not pay the loan back on time. Low interest payday loan lenders can be found all across the market.
2. All Lenders are the Same
Do not assume that just because you find a low interest rate, the lender is safe. Unfortunately, bad lenders will try to scam you if you are not careful. Before you apply for a payday loan, make sure the lender is reputable and trustworthy. These dishonest lenders will try to take advantage of individuals who are desperate for money. They know you are in a dire situation and will do anything to take your money. Before you apply for a payday loan, you need to read reviews from other customers to make sure the lender is legitimate. If you fall for the tricks and schemes of a bad lender, you could end up in a hopeless financial situation.
3. Payday Loans are Only for People Who Desperately Need Money
Since these are short-term loans, many people think that payday loans are only for people who are really struggling financially. However, many people who want a payday loan have excellent jobs and will have no trouble repaying the loan. It is a misconception to thing that young individuals with a good job do not need a payday loan. Unexpected expenses could come up, and they do not want to put the expense on a credit card, so they just need a little money to make it until their next payday.
4. Payday Loan Lenders Do Not Look at Your Credit
While it is true that many payday loan lenders do not conduct credit checks, some lenders will look at your credit. There are certain lenders who will peek at your credit to view your credit history. These lenders do not expect you to have excellent credit, but they want to make sure you do not have a history of delinquent payments. If you have numerous delinquent accounts, you might not be approved for a payday loan. If your credit is going to be an issue, you need to make sure they lender does not perform credit checks.
5. They are the Answer to Your Financial Problems
Many people believe that a payday loan is the solution to your money problems. While these loans help you get some temporary relief, they are not the long-term solution. If you have having major financial difficulties, these loans will not solve the problem. If you are not careful, you could even end up in worse financial shape than you already are. If you apply for a payday loan, you need to make sure you can pay back the loan on time.