There are a lot of things, people, and activities that are misunderstood in this world. I think human nature calls for the average person to fear and to loathe things that they do not understand. It has been this way throughout the history of mankind and things are probably not going to change radically in the near future. As such, it is up to those who have had the chance to have their minds open to try and make others understand that which is misunderstood.
So, opening the subject of payday loans – these loans are probably one of the most misunderstood loans. Try doing a search on Google or MSN or Yahoo using the search terms “payday loan”, “cash advance”, and other similar terms. The chances are that within your list of results, you will see a considerable amount of articles and news items that belittle and scoff at payday loans. The main argument against payday loan is that they are “very expensive” loans and that payday loan providers prey on the vulnerable and needy. Yet how true is this? What is a payday loan, really?
A payday loan is a short term loan that is available to anyone who has need of it. Of course, they do come at a price – there is practically nothing free today. There are some requirements in order to be able to take out a payday loan. First, you have to be a US resident or citizen. You also have to be at least 18 years old. Another requirement is that you have to be able to prove that you have a regular source of income. This could either be several pay slips from your employer or if you have your own business, then your financial statements will do as well. Last, you need to have a current bank account.
If you meet all these requirements, all you need to do is to fill out an online application. Everything is done electronically so you do not have to go out and fall in line at the bank or any other physical premises. If your application gets approved – and they almost always do – then you can expect your money within the day or the next several days.
So what’s the big misunderstanding about payday loans? This revolves around one main thing – the charges, or interest as the detractors would like to call them. The truth is that payday loan lenders do not charge interest in the same way that conventional lenders do. As a result, when charges are translated into the more traditional APR, the result is quite astronomical. This is where the misunderstanding comes in. I believe that the charges for payday loans should be taken at face value and not tried to be turned into something else that may confuse people even more. Payday loan lenders charge a fixed fee for every certain amount borrowed. So, for example, if you borrow $100, you would have to pay an additional $20. If you borrow twice that – $200, then you would have to pay an additional $40. This charge may vary from lender to lender.
Hopefully that has given some light on the misunderstanding about payday loans.…