Making Sense of Online Payday Loans
The online payday loan is a straightforward concept: a company typically lends $100 – $999 with the expectation that the borrower will repay the loan in full. Online payday loans can help with financial emergencies like an auto repair or medical bill, but many people avoid them because of myths surrounding payday loans. Let’s set the record straight:
Myth #1: Online Payday Loans Are Scams
There are bad apples in any industry. In payday lending, there are laws to protect consumers, including the Truth in Lending Act. The Online Lenders Alliance (OLA) is an industry association working hard to enforce best practices and a code of conduct for online lenders. Furthermore, the OLA is dedicated to educating and protecting consumers, and handles consumer complaints to go after bad apples.
Myth #2: People Get Tricked into High Interest Rates and Fees
Online payday lenders (including our network of lenders) can help consumers with poor credit whom banks typically reject. Thus, payday loan interest rates and fees can be higher than traditional bank loan terms. The Federal Truth in Lending Act requires online payday lenders to show borrowers information like interest rates, fees and penalty rates before they decide to accept a loan. The goal is to ensure borrowers understand their loan terms. You are under no obligation to accept a loan offer.
Myth #3: You Need Good Credit
Online payday lenders (including our network of lenders) work with people with bad credit. Your credit rating is not the only factor in the online payday loan process, and online payday lenders (including our network of lenders) work with people with bad credit.