If we are honest, there are a lot of quick loan myths in the loan industry which have negative perceptions. There are many misconceptions as some lenders employed unethical lending practices. As a result, a range of false or exaggerated perceptions has emerged. Still, you should know there are always two sides to every story.
1. Quick Loans Are Schemes That Rip You Off
To start with, due to the bad publicity that quick loans have received in recent years, most people have come to believe that these loan products are rip-off schemes. This one of the main quick loans myths.
Quick loans are suited for people that are in urgent need of cash but cannot access it elsewhere. Therefore, as long as you meet the loan repayment terms, everything is fine. Things are likely to get off track when you miss making repayments or you default – which applies to all types of loans.
2. Quick Loans Are Beneficial to Lenders Only
Moving on, another of the common quick loans myths is that providers of quick loans want to rip-off customers. However, considering that the lending criteria for these loans are really permissive, it makes sense for the interest rates to be as high as they are – especially since these loans usually don’t imply a credit rating check.
People with poor credit rating can seriously find these financing options life-changing. The only requirement you should meet is to have a steady income so that you can repay the loan in time. Also, since this type of loan doesn’t require collateral, the additional costs are greater than in the case of other types of financing.
3. Quick Loans Have Concealed Fees and Additional Costs
The list of popular myths regarding short-term loans continues. Many people are under the impression that payday loans come accompanied by hidden costs and fees the lender hesitates to disclose. The reason behind this assumption is that the majority of borrowers aren’t responsible enough to go through all the terms and conditions included in the signing papers.
It is against the law to conceal fees and additional costs – that is to say, all lenders based in Australia must be 100 percent transparent and upfront concerning the terms and conditions of the loan. Therefore, in order to avoid such scenarios, borrowers should take the time to scrutinise all the information about the loan product.
4. Quick Loans Are for People with Serious Financial Problems
Furthermore, there are also quick loan myths that short-term loans are provided for poor people with unstable financial situations. As mentioned, quick loans do not reflect financial stress, they simply offer people with an immediate alternative to cash.
Additionally, all types of people deal with financial difficulty. Therefore, it would be wrong to assume that whoever gets a quick loan is part of a specific segment of the population. As a matter of fact, when you need money for an emergency, it simply means that you’re going through something and there’s no other way in which you can get the money you need.
5. Payday Lenders Use Threatening Strategies to Collect Payments
While it’s true, to some extent, that some payday lenders use aggressive marketing techniques to promote their loan products, this doesn’t mean that they use threats to collect the payments.
Truthfully, reputable lenders, such as Australian Lending Centre are transparent and upfront regarding the terms of the financing. At the same time, reliable lenders never use these tactics. This merely means that you should do your research before picking out a lender out of the sea of lenders.
6. Taking Out Quick Loans Means That You’re Irresponsible
There is a common misconception that those who apply for a quick loan are financially irresponsible. Nevertheless, as long as you consider both the pros and cons of this decision, this doesn’t apply. It is implied that each financial decision has a range of pros and cons. It makes total sense for quick loans to have both pros and cons.
Evidently, the pros are that you get quick access to cash when you need it, without having to worry about the application process, adding collateral or a co-signer. When you need cash ASAP you don’t have time for these.
On the other side, the cons are that the interest rates are high and that, if you default on the loan, you might end up in financial hot water. Still, this applies for all types of financing – meaning that, regardless of the loan product you want to apply for, you should be 100 percent sure that your financial situation allows you to cope with making repayments.