Instant Cash Loans Fact And Fiction Part I | PaydayLoanSolutions.Net

What do you really know about instant cash loans other than what you hear from bank employees? The news is always filled with tales of bad lending practices by online cash loan companies. This is a convenient way of hiding the less than transparent practices of banks. Coming up are two articles which delve into the fact and fiction of instant cash loans, giving you the real story beneath the hyperbole.

Fiction #1

Instant cash loans carry an interest rate that is too high. These loans cause bankruptcy in families. Opponents of online cash loans are unhappy at the fact that loan terms are as short as seven days because this pushes the interest rate to unreasonable levels. Various advocates of banks want to limit the alleged harmful effects of online cash loans and are calling for a nationwide ban.

Fact #1

The reason why the interest rate of these cash loans are so high is because they are extremely short term. The APR may seem to be high but in actual fact, the majority of states have limits on the level of interest that can be charged by an instant cash loan company. Most states don’t allow more than $15 interest per $100 and the repayment term could be anything up to 30 days. Instant cash loan companies can also justify these fees because of the high default rate and the fact that they are providing an emergency service.

Fiction #2

Online cash loans have sneaky rollover charges which is where most borrowers gets caught out. There may only be a 36% APR on the loan but loopholes used by instant cash loan companies push this over 700%. It’s also claimed that senior citizens are targeted by these companies because they are vulnerable. The high rates of these loans cause borrowers to renew them and this is where they get into financial trouble.

Fact #2

The terms and conditions of each instant cash loan are clearly outlined at the beginning. No one is coerced into placing their signature on the agreement form. Customers are welcome to reject the loan if they don’t like the terms. Besides, APR’s of 700% only occur in extreme cases when the loan is massively overdue. As for targeting senior citizens, this is nonsense. Online cash loan companies can’t refuse to lend money to seniors or else they will face charges of discrimination.

Fiction #3

Instant cash loan companies cynically target lower income areas looking to swoop in and provide their high interest loans. There are allegedly twice as many cash loan companies close to poverty stricken neighborhoods than banks.

Fact #3

There may actually be some truth to the fact that there are few banks in low income areas. They have abandoned these people who need them most and have moved operations to wealthy, middle class neighborhoods which is extremely cynical behavior. There are actually more check cashing outlets in low income areas. You will not receive a short-term cash loan unless you have proof of income and companies of this nature can only offer a certain percentage of your monthly income by state law.

In the second part of this exposé we will look at more facts and fiction relating to instant cash loan companies.