Most of the common misconceptions regarding payday loans come from the people that are against this kind of loans who intentionally place misleading information on the web. With all kind of myths regarding payday loans circling the internet, it’s sometimes hard to tell which ones are true and which ones aren’t. We’re about to debunk some of the most common myths to help you decide whether choosing this kind of loan is a good option or not.
Myth No. 1
They exploit the low class
It’s a popular misconception that the majority of people who use payday loans are from low class families. This is probably due to the fact that applying for a payday loan doesn’t require a credit check, which enables even the ones with low or unstable income to apply for it. These people would get rejected for a loan in most banks, so this is the only solution they have got when in need for a quick cash flow. But the real facts tell that not only this type of loan is used by middle and upper class families too, it turns out that the majority of people using payday loans are from middle class. The average yearly income of these people ranges from somewhere between $25,000 and $50,000 and these are all people who were facing unexpected expenses that chose this option to solve their problems.
Myth No. 2
There are hidden fees no one tells you about
While it’s true that fees for using payday loans aren’t exactly the lowest thing ever, and they can get extremely high compared for credit card loans, for example, but there are still no hidden expenses like many people claim. Every licensed payday lender has their fees fully disclosed in the lending agreement, and you won’t be charged a cent more than what you agreed to in the contract. There are penalties for those failing to return the borrowed sum that may add up to the whole fee amount, but they are also transparently disclosed in the contract, so there is nothing to fear.
Myth No. 3
The aggressive ad campaign made these loans popular
It was actually the ever growing demand for payday loans that made them popular, and in the logical course of events more payday lenders have joined the market since. With high competition like the one in the field of payday loans, it’s no wonder many of them turn to aggressive marketing campaigns in order to attract more customers. Anyway, no one can force you into applying for a loan, no matter how aggressive the marketing is.
Myth No. 4
Payday lenders are not regulated
While some states have made payday loans illegal, all other 34 states at present time have fully regulated licensed lenders. This means that the consumers are protected by laws and there are fee limits and other benefits which prevent payday lenders to put sky high interest fees or exploit their customers in any way. The Community Financial Services are working on regulating payday loans laws in all states.