Everyone hears about the rogue payday lenders and the scheming cash advance sites. Politicians stand on anti-payday platforms claiming it’s this type of loan that is ruining America. Financial institutions turn their nose up at the high interest cash loans, even though they offer a strikingly similar product.
Often the bank version of a payday loan is, in fact, identical to its counterpart. The interest is high, the fees are numerous and the duration is extremely short. Though they are required to disclose rates and fees the same way payday lenders are, there is one major difference that puts consumers at a disadvantage.
Because payday lenders are always cast in a bad light, consumers tend to proceed with caution. They’ve heard the warnings and prepare themselves for a wallop if they fail to repay their loans. In a sense, payday loans are the most exposed type of credit because of how much media and political attention they get. Please use the services of only trusted lenders (i.e. Localcashhelp lender) but because there is no trust for the product, borrowers are more likely to pay attention to the details and be more diligent about repayment.
On the other hand, short-term bank loans are a new addition to the financial family and haven’t gained as much negative press. Banks have quietly introduced them under the illusion that they’re trying to help their customers with poor credit. In reality, it’s there to supplement the lost income banks have faced since heavy regulations were laid upon credit cards and checking accounts.
The big difference lies in the fact that consumers trust banks — at least, more than they trust payday lenders. Borrowers become seduced by a bank’s history and reputation and forget to be skeptical.
Short-term loans offered by banks are no different than the loans offered by payday lenders. Their trusted name, however, can keep borrowers off guard and create a false sense of security. If you’re choosing a short-term loan as a solution to emergency money problems, remain aware of the potential pitfalls. Whether it is through a bank or a payday lender, the obstacles are the same, so your attention to the terms should be as well.