5 Common Myths About Online Payday Loans

If you’re considering using online loan services, you may be wondering what’s true and what are myths about online payday loans. It’s understandable to want to protect yourself and apply for online loans safely.

At Lending Bear, we offer state-licensed and highly reputable online payday loan services. We’re also loan experts, and in this guide, we’ll dispel 5 common myths regarding online payday loans so that you can make the most informed financial decisions.

Myths About Online Payday Loans

#1 You Must Have Good Credit

Some people believe that to secure any type of loan, including an online payday loan, that you’ll need good credit.

The truth is, that many lenders will approve payday loans to borrowers with poor or no credit history. For this type of short-term loan, what lenders want to see is solid work history and proof of income.

This is because the concept behind payday loans is that you back the loan back with your next paycheck.

Myth #2- All Online Loan Applications Aren’t Secure

Some potential borrowers may be worried that their information will be stolen or put in jeopardy by applying online for a payday loan. You always want to work with a reputable lender, and stay away from unlicensed and poorly reviewed companies.

However, highly reputable companies take many steps to secure your personal information. At Lending Bear, our website and loan application forms are encrypted, password-protected, and secured with antivirus and firewall technology.

Myth #3- Payday Lenders Charge Hidden Fees

Some people believe that if you use a payday loan lender you’ll be hit with hidden fees. The truth is that the Truth in Lending Act requires lenders to be transparent about all associated fees and loan term amounts.

It’s important to fully and carefully read your loan agreement to make sure you understand the terms. If you have any questions, always ask the loan representatives before signing any documents.

At Lending Bear, we highly value honesty and are members of the National Pawnbrokers Association, follow INFiN industry best practices, are ADA compliant, and have an A+ Better Business Bureau rating.

Myth #4- They Are Secured Loans

Some people believe that payday loans are secured loans, but this is untrue. Payday loans are unsecured loans, and borrowers need to understand the difference.

Secured loans are backed by collateral which the lender can collect if the borrower fails to repay the loan. Examples of secured loans include title loans, home mortgages, pawn loans, and vehicle loans.

Unsecured loans are not backed by collateral, which makes them a higher risk for the lender. As such, these loans typically require lenders to have good credit and employment history. Because payday loans are often accessible to borrowers with poor or no credit history, some people mistakenly believe they are secured loans.

Rather than looking at credit histories, payday loan lenders typically want to verify the borrower’s income, and the amount lent is typically no more than $500..

Myth # 5- the Loan Amount is Solely Determined by Your Income

While lenders assess your current income to help determine a payday loan amount, it’s not the only determining factor. This is because states have different maximum limits that lenders can legally provide to borrowers.

For example, the maximum payday loan amount lenders can provide in Alabama is $500.

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