There is the misconception that payday loans are for low income earners that constantly struggle to make ends meet. The truth is that a tough economy and even tighter job market have left many people, including high income earners, a little short of cash from time to time. When this happens, then a payday loan can be a solution for everyone. There are a variety of reasons why people, even high income earners, may need a payday loan.
Having a high income doesn’t mean one has a good credit history. There are plenty of high income earners that have poor credit as a result of many things, such as bankruptcy, foreclosure or divorce. Payday loans don’t require good credit. In most cases, the only things required to get a payday loan are a proof of income, a checking account and a proof of residence. A payday lender will use your check to hold as collateral for the loan. Online payday lenders will secure the loan through a direct draft from a checking account.
Tougher Lending Standards
The criteria for lending money has also tightened up. Auto and home loans have collateral tied into them, but personal loans, open cash loans, don’t have any collateral or equity tied into it. Personal loans already require higher credit criteria, so any credit blemishes can result in a denial of a personal loan. Most payday loans don’t run a credit check, and if they do, their lending requirements are much lower. This doesn’t mean payday loan providers don’t have responsible lending policies in place, but on the whole, most are more concerned with employment history and a transactional account that’s in good standing.
The economy is tough on everyone, including high income earners. Unemployment is higher now than it has been in many years. Those that still have jobs are dealing with reduced hours at work, which cuts their income. Each month, many people are finding themselves short on cash to meet their needs. A payday loan is a solution to short term cash needs, especially for high income earners. However, it’s important to stress the danger of using one payday loan to pay off another. This is not the solution. If you find yourself in a debt cycle, first things first, develop an action plan to get you back on track.
Getting a payday loan for high income earners is also a matter of convenience. Payday loan decisions are instant. Most payday loans are approved within an hour of a submitted credit application. You can walk away with cash in your hand if the loan is taken from a store, and you can have the funds deposited into your checking account by the next business day if the loan is taken out online. Some people, including high income earners, don’t have the time to apply for a loan at the bank. Bank loan applications may require days to process before you are able to receive the funds. For some people, this doesn’t meet their immediate cash needs, and a payday loan is a better option.
Higher Income, Same Needs
High income earners need payday loans for the same reasons that low income earners need. High income earners have car payments to make, utility bills to pay, and high income earners also have emergency situations that require quick cash. Payday loans can get people the cash they need for whatever the reason, regardless of income.
5 Myths about Payday Loans
1. Payday loans are only for poor people
As you have read, there are many reasons why high income earners need payday loans too.
2. Payday loans charge high interest rates and fees
Payday loans do charge higher interest rates than a traditional loan, but the credit requirements are less strict, and you will get your money faster.
3. Payday loans surprise you with hidden fees and higher interest rates
Payday loans must disclose the terms of your loan just like any bank loan or other loan you may get.
4. Payday loans are embarrassing to get
There are many reasons why people of all income levels may need a payday loan.
5. Payday loans are impossible to pay back
As with any loan, only borrow the amount that you know you can pay back, including the interest rates and fees.