Untruths about Payday

Payday loans online are often misconstrued for a variety of reasons, perhaps genuine mis-education or a penchant for tabloid revelry, but whatever the reason there are a few myths which really should be dispelled at this juncture as they carry nothing but untruth which attracts bad press. Of course, this list is by no means exhaustive, but should at least go some way to finally give a voice to the often too easily ignored side of the argument.

Myth: Payday loans deliberately carry huge interest rates the borrower cannot meet

Although the most common misnomer attributed to same day loans, anyone with an iota of intelligence should be able to work out that this particular myth is completely nonsensical. What exactly would be the point of loaning cash to a person under terms they could not uphold? By definition, if they cannot uphold the terms, they cannot repay the borrowed amount; therefore a situation is created of absolutely no benefit to either party. In its simplest terms, the borrower is left in debt; the lender does not get their money back.

Obviously, this is not a viable business model for any company to follow and therefore a complete falsehood in the matter of short-term loans. Furthermore, those who choose to research the subject a little deeper will find that the interest rates offered by payday sites are not just competitive, but often cheaper than those offered by the major high street lenders.

Remember, the APR attached to a payday loan is required to be displayed as an annual figure, regardless of the repayment period never being more than a month or two.

Subsequently, this figure triggers panic in those who fail to read between the lines, which is understandable though entirely unfounded. These loans are designed to be the most simple and straightforward option available, promising no hidden fees or complicated jargon included simply to baffle and ultimately fleece the unsuspecting borrower.

Myth: They exist only as a last resort for emergency use

While payday loans do indeed exist for emergency cash in times of crisis, this is far from their sole purpose. Increasingly, these cash loans are being utilised by the savvier consumer as an alternative to incurring overdraft charges, late payment fees or the myriad of other pitfalls presented to us everyday determined to destroy our credit ratings. The relatively low fee connected with a short term loan frequently offers a cheaper alternative to ever escalating bank charges, while insuring credit records stay intact.

Additionally, online payday loans are the perfect way to secure a small amount of extra cash for tiding over such expenses as grocery bills, fuel fill ups, social outings and other general day-to-day expenses which would hardly count as emergencies though carry no less importance.

Myth: Short term loan companies are modern loan sharks

Firstly, this frankly offensive accusation can be more or less cleared up by taking note of the first item in this article. Loan sharks are traditionally known for their way of forcing borrowing into contracts they have little to no way of upholding, resulting in ridiculous debts and terrifying scare-tactics to ‘encourage’ repayment. Stories of stalking, threats and physical violence go hand-in-hand with the loan shark subject resulting in far too many people tarring the honest lender with the same brush.

As explained before, this tactic simply does not work and stimulated nothing but misery and loss for both parties, neither of which are attractive qualities to a sensible business. Payday loan companies are registered, monitored and regulated by a higher authority making it simply impossible to enter into any practice seen as unfair or immoral without grave consequences. Everything is agreed on in simple black and white terms with no unnecessary pressure or salesmanship, all geared toward providing only what it requested and not a penny more. This in particular is something a major bank simply cannot lay claim to.

Furthermore, anyone who has ever had a cheque bounce, breached their overdraft limit or overlooked a credit card payment will know all too well that the charges incurred for such minor discrepancies are nothing short of criminal. How exactly such fees can be justified by organisations of infinite wealth is anybody’s guess, but somehow they manage it without ever attracting the stigma and reputation often associated with the short term lender. Fair?


The list goes on but if any more convincing is required, the best advice is to consult a lender where it is possible to see the services on offer along with their subsequent fees without the need to officially register or apply for any service. Again, how many banks can stake claim to service like that?


Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk