What is the truth about payday loans?
It is a myth that Payday loans may eat you up. Some financial pundits and the prominent grapevine would have you believe that instead of being your savior, payday loans are your killer. This is far from the truth.
Why would payday loan lenders want to push you into debt?
If the lenders of such loans intend to push you deeper into debt, how are they going to stay in business? They want you to pay them back as much as you want to pay them back. It is never going to be the intention of good lenders to push you deep into a hole of debt where you would not be able to dig out of, because they need you to pay them back.
Moreover, they don’t lend you more than you can pay back on your next payday. If the borrower is not able to pay that back, it is not the lenders who got them into trouble but the borrower, who should have been more responsible with his or her money. This is not just for payday loans, but for credit card charges and other types of loans. No one should take out a loan if they have doubts about repaying it.
Be strict about repayment
For your own peace of mind, make sure to only take any loan if you are sure you will be able to repay it. Forget about the half measures, like paying a portion and leaving the rest for another payday. This is not the way to manage payday loans. You have to simply make sure that you will pay back every penny that is due when it is due. This is a loan meant to ward off a crisis and not so much a loan to repair debt (although there are ways you can repair debt with a payday loan, too). If you have serious debts, you may want to consider another type of loan, a debt consolidation loan.
Be aware of the situation
Don’t get the wrong idea that payday loans will milk you dry. Remember, you signed the agreement when applying for the loan, so, you should know what your terms of repayment are. No, the lenders cannot charge you more than what is laid down in the agreement. The lenders should disclose every detail of the loan to the borrower, before the borrower signs the agreement. So make sure you read the terms and conditions well before signing. This way you will not be in for a surprise, when you see the withdrawal from your next payday income. No matter what, you should make repayment your first priority with your next payday check.
Interest
Another myth doing the rounds about payday loans is that they charge exorbitant amounts as interest or costs. With good lending companies, this is not the case. Most payday loan lenders do not even charge interest. They typically only charge a fee or cost for the loan amount. Many states have imposed a limit for these rates, though they are not a uniform fee for those states.
The facts
We should face up to the hard fact the falling deeper into debt is our own doing and not the fault of the lending company or anyone else. Manage our loans well and we will keep out of trouble.
Absolutely. Sound advice. If you’d like to see more about why some people mistakenly call payday loans “evil” (I have to laugh, no matter how stiff a pious person’s upper lip must be when they counter payday loans on religious grounds)… check out my article “Payday Loan | Christian Right and Usury in Theory and Practice“
Well said…….how about some more articles like this one? Advocates of this loan industry need more articles like this with which to extinguish the nonsense that is being spread around by activists. Mark Twain spoke the truth when he said that “a lie will make it all the way around the world before the truth can get out of bed.”
I don’t get where anyone gets this “predatory lending” idea – all the terms are disclosed up front, which is far better terms than any bank will give you. If a mortgage company or finance company did things that way perhaps we wouldn’t have the credit problems we do.