Payday loans can be helpful when faced with an unexpected expense that your monthly income cannot cover, but they can sometimes get a bad reputation. There are various myths surrounding this type of finance, which we will take a closer look at and debunk below, so you can choose a reputable payday loan direct lender UK to suit you.
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Myth 1: Payday Loans Are Predatory
Many people are still under the impression that payday loans are predatory – but this is no longer the case. You should always choose a reputable lender that comes recommended by other borrowers and has a good track record when it comes to customer service.
This is essential as many payday loan lenders are based online, meaning there may still be some predatory behaviour taking place, but going with your gut feeling and knowing what to look for means you’ll be able to avoid this.
To ensure you’re choosing a reputable lender, look for evidence that they’re regulated. This is likely to be stated on their website. You should also look for transparent terms and conditions – this means clearly being informed of the total cost of borrowing and the repayment schedule that will be expected of you.
The lender you choose should carry out responsible lending practices, by ensuring the borrower can afford to repay the loan, and by offering financial counselling when necessary.
Myth 2: Payday Loans Create a Cycle Of Debt
Whilst the shorter repayment period of a payday loan can make them more difficult to manage than other types of finance, it’s worth knowing more about the context surrounding payday loans and the debt cycle, and how this is not always the case. There are a few factors to think about, with one of the most important being borrower responsibility.
Before borrowers take out a payday loan, they should ensure they can afford to meet the repayment terms required, as well as look at various other types of finance and support when struggling.
But it’s not just borrowers that have a responsibility when it comes to repayment. Lenders that operate ethically will conduct assessments to ensure a borrower can afford to pay back the loan.
They have a responsibility to do this and will consider a borrower’s income, monthly expenses, and other financial obligations before they approve the loan application.
Myth 3: Payday Loans Are the Only Option
If you’re faced with an emergency expense and you’re not sure how you’re going to pay for it, payday loans can be helpful – however, they are not the only option. Before you decide to apply for a payday loan, you should consider alternatives.
You could explore credit unions, community programmes, or talk to financial advisors to get a better idea of the next steps and money management.
Myth 4: Applying For Payday Loans is Irresponsible
Payday loans can sometimes get a bad reputation, due to predatory practices carried out by lenders in the past. However, times are changing, and so are payday loans. Applying for a payday loan should no longer be seen as irresponsible.
These loans can be used to help those faced with an unprecedented expense deal with a situation that may not leave them with any other choice. With this in mind, it’s essential both the lender and borrower take accountability to ensure they’re proceeding with the best option.
Choosing a reputable lender, and ensuring you can afford to repay a payday loan means you can benefit from funds when they need them most.
