There are many rumors regarding payday loans Knoxville Tn, that spread negativity about them. Payday loan critics always tend to divert the attention of people who are looking for payday loans so that they could opt for loan alternatives such as cash advances, long term loans etc.
Some are said to do it due to competition while some because they have a lack of knowledge. Spreading myths is said to be the easiest way to fool people, however today we’d be busting them.
Payday loans are short term loans which are genuinely beneficial for the borrower in many ways and there’s no truth to their negative image being portrayed in the world of loan borrowing. Therefore, there is all the more need to bust these myths about payday loans and prove how helpful they can be when someone’s dealing with financial issues.
Without further ado, here are a few myths about payday loans:
Payday Loans Are Expensive And They Come With High Interest Rates
Payday loans are expensive is something a lot of people hear from various sources. However, there is nothing of such sort when you deal with payday loans because the truth about them is that they are a 2-week short term loan rather than long term and they by no means intend to be annual loans. Payday loans are meant to be feasible until and unless you can pay off your loan on time.
The average fee for payday loans is 15%, meaning if you borrow a $100 loan, you only have to pay $115 with no huge interest fees if you manage to pay it in 2 weeks time. Your interest is only $15 in this case. However, if you fail to pay it within the due date then the fee get rollovered and this time the interest would be higher than before.
Payday Loan Companies Trap Poor People
People often think that loan companies are always searching for ways to trap needy people, they meant to take advantage of their situations and trap them by lending them a big loan. It’s not like that.
No one forces anyone. In fact, in order to apply for a loan, you must have a steady income source and a running bank account. This is the eligibility criteria to get a payday loan and this doesn’t imply that companies trap poor people.
Loan Companies Tend To Keep Loan Borrowers Unaware Of The Loan Terms And Actual Fee
The fact that loan companies try to hide loan regulations from borrowers is utterly wrong. In fact, it is the other way around.
The U.S federal law prohibits lenders from doing so because according to ‘ Truth in Lending Act ‘, the company/lender is required to disclose the terms and conditions along with a flat fee with no hidden charges to the borrower. Hiding this information can come with severe penalties and can also put the lender/company out of business for good.
There Are Better Options Than Payday Loans
When you look at it, you will find countless alternatives to payday loans such as a regular loan or even credit card loans. However, once you go into details you will realize that while the alternatives are there, they are not better than payday loans.
These other type of loans are hard to get as you need collateral, which is often hard to come by. Moreover, the rate is also often higher making payday loans the best choice for most people.