Believe it or not, some lenders of cash loans in Salt Lake City, Phoenix, and other major cities are not who you think they are. Yes, there are loan providers who are notorious for shady business activities, but there are lenders who observe honest practices — if you know where to find them.
Here are some of America’s misconceptions about payday and signature loan providers:
They Loan Irresponsibly
By and large, these lenders don’t put a premium on credit scoring because they usually offer financial products to subprime borrowers. However, simply because they try to appeal to the unique needs of individuals with less-than-perfect credit ratings, it doesn’t mean they don’t exercise due diligence.
Payday and signature loan providers may not discriminate individuals with low credit scores, but they do check credit reports. This way, they can prevent fraud and protect people from identity theft.
They Charge Unreasonable Interest
There’s no denying that these unconventional lenders charge interest higher than traditional banks and credit unions. They only do it, though, to compensate for the great risk they have to take when extending credit to subprime borrowers.
Responsible businesses make every effort to provide fair deals. If you look hard enough, you’d find a lender who’s willing to beat the interest rates offered by its competitors. Many even incentivize borrowers who pay on time with a vanishing interest.
They Intentionally Trap Borrowers in a Debt Cycle
Reputable lenders play by the rules. They explain how the loan works to help borrowers avoid the financial implications of paying late or defaulting. Some payday or signature loan providers don’t even require a check as collateral to ease the financial pressure of repayment.
Moreover, many trustworthy cash loan lenders report payment activities of individuals to major credit bureaus. They actively assist subprime borrowers building their credit and be more creditworthiness in the eyes of traditional lenders.
Not all unconventional lenders are loan sharks that are only interested in profit. Some bad credit loan providers are still out there that do business without ripping people off.