Let’s face it! The UK payday loan industry isn’t exactly in its best shape today. The industry has had a bad name for years now because of factors like unfair lending practices. Lenders who have been using unfair lending practices have given the industry a bad name and inspired some popular perceptions which may not be necessarily true. It’s important to discover these perceptions for you to be able to enjoy the full benefits of payday loans. Let’s get right into it and discuss the top payday loans myths.
1. Payday loans are ploys to rip you off
The bad publicity surrounding payday loans has led some people to believe that payday loans are just ploys to reap off people in need of cash. This couldn’t be further from the truth. Payday loans are the best types of short term loans for settling emergency cash needs provided you meet your repayment obligations i.e. you repay the loan off in time. Like most types of short term loans, payday loans become expensive when you miss a payment or default.
2. Payday loans benefit lenders only
This is another common myth surrounding payday loans. Contrary to popular belief, borrowers actually benefit from payday loans because they are easy to get when you are in desperate need of money. The loans don’t have a waiting period like conventional loans. They also don’t require collateral or credit checks. All these payday loan features benefit borrowers. Lenders just benefit from the interest borrowers pay which is very little if borrowers pay on time or in advance.
3. Payday loans have hidden fees and conditions
Many people also believe that payday loan lenders add fees and make changes to the original terms of payday loans after they have been granted. This isn’t the case. The reason most people assume this is the case is because very few people go through all the terms and conditions initially when taking out the loans. The UK payday loans industry is highly regulated. All lenders must disclose all fees and conditions beforehand so it’s impossible for lenders to add fees and conditions once a loan has been taken.
4. Payday loans are for people with serious financial problems
Many people have been led to believe that payday loans are taken by broke or poor people. This isn’t the case. As mentioned above, payday loans are meant to finance emergency cash needs. As a result, taking a payday loan doesn’t mean you are poor or broke. It could just mean you didn’t have access to your money immediately when an emergency expense arose, or you just needed a little help because the emergency expense wasn’t budgeted for. Furthermore, there are statistics indicating that payday loans are taken mostly by the middle-class that are financially stable.
5. Lenders coerce payday loan customers for collections
Payday loan lenders are guilty of using aggressive marketing tactics, however, they don’t use threats or force when collecting dues. All reputable payday lenders like Swift Money use fair, lawful and professional means to collect past dues. Furthermore, customers who feel they have been coerced can always file formal complaints with the Better Business Bureau. It is also worth noting that there are measures in place i.e. interest caps to protect customers in case they have difficulty paying back their loans.
6. You are better off without a payday loan
Many people also believe payday loans don’t have any benefits. This couldn’t be further from the truth. Although payday loan lenders really market their loans aggressively, the demand for payday loans continues to increase globally, not only in the UK. This is a clear indication that people need payday loans and actually find them useful especially in emergency situations.
This myth stems from the fact that some payday loan customers have had to pay high interest charges in the past because of unfair lending practices by a few rogue lenders. As a result, you can actually take a payday loan and benefit immensely. In fact, payday loans are among the best, if not the best, types of short term loans available today if they are taken wisely, used wisely and repaid on time.