Payday Loans

A Common Misconception About Quick Payday Cash Loans

There are thousands of commissioned social researchers and professional public relations lobbyists who are working day and night for the payday loan industry. All they are doing is to spread misconceptions about quick payday cash loans. That is the reason why it is easier to find articles and reports on how beneficial these loans can be for consumers than how risky and costly they actually are. The payday loan industry is spending a whopping sum of money to make sure their target customers (who are mainly the most vulnerable American consumers in terms of their finances) continue borrowing such loans. In fact, it should not at all be an exaggeration to say that it is mainly because of those common misconceptions only that helped payday lending into a multi-billion dollar industry.

It Is A Small Amount Of Loan; So, Repayment Is Not Much

Of A Trouble

Quick payday cash loans are advertised as a very “small” amount of loan for a very short period of time. People are led to believe that as soon as they get their next salary, they can easily repay this money. Payday loan companies do their best to make sure their target customers do not realize how hugely costly these loans can be. Though it is true that payday loans are often very small amount of loans, ranging between $100 and $1000, it is a misconception that it is easy to repay. As a mater of fact, the borrowers for these loans are mainly very low-income consumers, and for them, even a ‘small’ amount of debt looks like a huge one, especially when massive interest charges apply to that debt.

The ‘only’ $35 of interest advertised for quick payday cash loans may look like a very small amount, but if you look at it in proportion of the low monthly income of borrowers, it may still be a huge impost. It is often a very difficult financial task for them to pay back over $135 for every $100 of payday loan they borrow. In fact, the $35 of interest mentioned here is just for the sake of example; the charges can be significantly much, much higher in real.

So, this is how even the so-called ‘small’ amount of loans are never easy to repay for

the kind of borrowers that take these loans. Many borrowers understand the extremely high cost associated with these loans, but they still borrow the same just because they need urgent money and are not able to think of a better alternative.

The key point is that when they do not repay their loan in time, they tend to borrow new quick payday cash loans to pay off the previous loan, which eventually traps them into a spiral of debt, where the outstanding debt balance keeps on multiplying itself very fast. Within a few months, a ‘small’ $300 of loan becomes a couple of thousands of dollars of debt.

Therefore, you are strongly recommended to do your calculations on the basis of your actual income. You must be very realistic about what you can afford and what you cannot afford.

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