7 misconceptions about payday loans – NoHo Arts District

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Payday loans are notorious. Everyone knows about them, but there are still many misconceptions about them. They are generally considered a poor choice for your savings and for your credit report. But with new technologies, a wider variety of lenders, and the ability to take out short-term loans quickly, today’s common misconceptions cannot be further from the truth.

Payday loans are now a type of short-term loan.… You can pick them up in a very short time, when you return them as soon as you get paid, or you can spread the payment between two and 12 months. In fact, a new short-term loan, an alternative to the old payday loan, often turns out to be a much better option as you can pay off your debt without sparing a penny and without waiting for the next month, which gives you a much more stable opportunity. restore your security system and move forward.

1. Payday loans will only rob you

While it is true that some payday loans have high interest rates, the ability to borrow short-term loans, compare payday loans online and choose the best lender and the best lending deal means you can get the loan you need at very attractive rates.

You will, of course, return more than you take, but this is true for every loan. There is a reason lenders have an incentive to lend money in the first place is interest rates. When you have a good account, you can get the money you want at very low interest rates, especially if you have the ability to pay off early.

2. Payday loans are beneficial only to the lender.

Payday loans are definitely of interest to the lender, but this does not mean that they are not profitable for the borrower. They exist precisely when you cannot pay off unexpected expenses in other ways. This could be because you need multiple paychecks to cover expenses because you have reached the credit limit on your credit card.

Taking a short-term loan to pay off on payday or slowly over several months can help you better manage your finances and cover the high costs associated with an unexpected bill or renovation.

3. Payday loans always have hidden fees and conditions.

It is not possible by law for payday loans to have hidden fees or conditions, or for those conditions to change after you sign the agreement. However, it is imperative that you read the terms of your loan carefully before agreeing and signing anything. The loan sector is highly regulated and protects consumers from unfair or even illegal actions by lenders. From there, you should make sure that you read and understand the agreement you signed.

4. Payday loans are only for people with serious financial problems.

You don’t have to be between a rock and a hard place to get a payday loan. In fact, obtaining such a short term loan can be a very demanding endeavor. The rest of your expenses won’t just disappear when you have to deal with large unforeseen expenses or repairs. Just because you can cover the cost of this repair or replacement with your next paycheck doesn’t mean you can actually afford it when you factor in other living expenses.

The best way to easily deal with these new costs is to spread the payments with a short-term loan so that you can confidently keep paying off without feeling pressured or drastic.

5. Payday lenders use threats or force when collecting contributions.

Payday lenders are highly regulated and use the same methods to collect missed, late or missed payments as banks do. These are fair and legal methods used to encourage payments. However, in extreme situations, your loan may be sold duty a collector who will again adhere to legal rules and regulations when it comes to collecting the money you owe.

If you feel you are being coerced or threatened, then be sure to follow this The Balance Small Business guide to report a lender and his behavior to the Better Business Bureau. If their behavior is truly outside the legal framework available to them, then legal protection is available to you.

6. Better not to take out a payday loan.

This misconception suggests that you can ignore the cost or invoice until you get paid. While this can sometimes be an option, be aware that you can only do this with the written consent of the company or person you owe money to. If you get permission to pay the bill by a certain date, you can avoid paying the payday loan. For example, if you work with a little mommy mechanic to fix your car, and you design a deal to pay your payday bill in exchange for keeping your car as collateral, then you might want to avoid a payday loan. Alternatively it would be better take a loan from a friend or family member if they have money and will be happy to help you.

However, most will not have this option, especially if you need a replacement or pay some kind of fine. In these cases, you will always be better off taking out a payday loan, or better yet, a short-term loan to pay off your initial bill, and then spread expenses further in a way that is convenient for your budget.

7. Getting a payday loan will hurt my credit score.

It is easy to see how this myth originated. After all, usually you only take out a payday loan when you don’t have the funds until your next paycheck. This can be seen as poor money management on the part of lenders, and therefore getting a payday loan can actually hurt your credit rating, right? Lie. In fact, if unpaid payments or invoices could damage your credit score, don’t miss the opportunity to pay off your loan.

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