Debunking Payday Loan Myths - How Payday Loans Have Helped Millions of Americans
Payday loans have received quite a bad rap in the media, mostly due to the sensationalized depictions of overzealous regulators and consumer activists. These payday loan critics claim that cash advance companies engage in predatory lending and other unethical practices to keep their borrowers trapped in debt. The way payday loan opponents speak of the alleged evils of the loans, it's hard to believe the loans have any redeeming virtues.
In reality, most of the negative information disseminated about pay day loans is false. The vast majority of payday loans do far more good than the media would have you believe. Read on to learn why critics of payday loans are mistaken and how cash advances have helped millions of borrowers through financial difficulty.
What Are the Benefits of Payday Loans Online?
Obtaining a payday advance online has innumerable benefits, a few of which we have outlined below.
Reasonable Interest Rates
With most cash advance loans, you will pay more reasonable interest rates than you would with a typical credit card because payday loans have such abbreviated terms. In other words, rather than drawing out your debt for years and accruing interest like you would with a credit card, you repay a payday loan in full on your next pay day. Shorter terms mean that the loan has less time to accumulate interest charges.
No Credit Checks
If you applied for a traditional personal loan at a bank or credit union, the approval would hinge on whether you pass the lending institution's stringent credit check. For people who have made mistakes with credit in the past, obtaining a traditional bank loan can be nearly impossible. With online payday loans, on the other hand, your financial background does not influence your ability to borrow. Your qualification will depend on other factors; a credit check is not necessary.
Private and Convenient
When you request a payday advance online, you can do so from the privacy of your own home, making the borrowing process discreet and convenient. You can request the funds you need without having to leave your home, visit a lender, or wait in long lines. On the Web, you have your choice of hundreds of payday lenders across the country.
Speed
Online pay day loans have expedited electronic processing that allows the lender to disburse your funds directly into your checking or savings account within 24 hours in most cases. You will not have to remain on pins and needles for days and days while your lender completes lengthy approval and processing procedures. Online cash advance companies are experts at processing your loan in the most expeditious manner possible so you have the money you need, when you need it.
Ideal for Financial Emergencies
Most financial emergencies don't require large sums of money, but they always seem to strike between paydays when you're lowest on cash. For this reason, a pay day loan is ideal to fill these temporary gaps in your cash flow. A payday advance allows you to address an emergency expense, such as a car repair or an urgent bill, immediately and at a lower cost than most other borrowing options.
Larger Loans Available
In the past, most lenders capped pay day loans at $500 or less. Now, with online payday loans, borrowers have many more choices and can customize their loan amount to meet their needs. As long as you meet your lender's income and other requirements, you might be able to borrow a cash advance of up to $1500 depending on your provider.
Who Uses Payday Loans?
One of the many spurious myths perpetuated about the payday loan industry is that lenders prey upon minorities, the poor, and the elderly in order to exploit their already compromised financial situations. The idea that pay day loan companies target the downtrodden is preposterous and could not be further from the truth. In truth, those who seek out payday loans online are typical middle-class, hard-working Americans who may not have the requisite savings to cover unexpected financial emergencies. Consider these facts about payday loan borrowers:
- Most cash advance borrowers earn $25,000 - $50,000 per year
- 68 percent of customers are under age 45
- 42 percent of pay day borrowers own their own homes
- 94 percent have at least a high school diploma, and 56 percent have some college or an advanced degree
- 100 percent have consistent incomes and active bank accounts, both of which are necessary in order to borrow a payday advance
How Does a Payday Loan Cash Advance Work?
The payday borrowing process is quite simple. You fill out an online form with your lender, your information is processed, and an approval decision is made. If you are approved for a pay day loan, a representative will contact you to complete the transaction. Learn more about the payday loan process.
Are Cash Advance Payday Loans Safe?
You have probably heard a lot of misinformation about the dangers of cash advances, particularly the practice of predatory lending in the payday industry. In reality, predatory lending is against the law, and the vast majority of payday advance companies are law-abiding and fair. Online payday loans are actually heavily regulated and quite safe, which we've explained in more detail below.
In addition, Personal Cash Advance takes your privacy and security very seriously. There are a variety of security measures in place to ensure your information is private and secure.
How Is the Payday Loan Industry Regulated?
Currently, the payday loan industry is regulated in 34 states. Typically, these regulations involve caps on pay day loan amounts, restrictions on the length of the loan's terms, and limits on who can take out cash advances and how often. For the most part, payday advances are regulated by usury laws, which are determined on a state-by-state basis. In today's parlance, usury is a term that describes the practice of lending money at unreasonably high interest rates. Usury laws typically set the maximum rate at which financial institutions can loan money, and payday lenders are subject to these laws where they exist.
Contrary to popular belief, the payday loan industry is not averse to regulation. In fact, the Community Financial Services Association of America (CFSA), one of the largest payday loan industry groups in the country, supports balanced and reasonable consumer protections and regulations that do not deny borrowers of their right to financial options. The CFSA works side by side with lawmakers in each state to develop a regulatory environment that establishes consumer protections to facilitate informed and responsible borrowing while respecting the interests of the industry.
On a federal level, payday advance loans are regulated in several ways. For one, cash advance lenders cannot loan to active members of the military. Secondly, all payday lenders must adhere to the federal Truth in Lending Act (TILA), which requires lenders to disclose the cost and rates of a pay day loan clearly and completely in the loan agreement as well as on any advertisements promoting specific cash advances.
