Ask questions about payday loan and find out if it is really the best option for you. You who need money to pay off debt or make dreams come true, know what it is and how to make payday loans?
Characterized by having its portion directly deducted from the payday, payday-deductible loans are one of the fastest growing lines of credit in Brazil, especially among withdrawals. Easy hiring and lower interest rates are among the main advantages of the modality.
The loan amount, repayment term, as well as the required prerequisites for approval, are some of the factors that should be evaluated against other types of credit. The following explains how it works!
What is payday loan and how does it work
Regardless of the modality, getting a loan is committing to repay the installments always on time. Therefore, experts recommend that the loan installments be paid as soon as your salary falls into account. But we know that this is not usually the case in practice, right? And so, the number of delinquents ends up growing. After all, nothing guarantees that money will be left until the end of the month!
In the case of payday loan, it is different. It is done through partnerships between financial institutions and public agencies or private sector companies. Thus, the amount of the installments is directly deducted from the payday, whether it refers to salary or a benefit, such as INSS.
Thus, since the risk of customer default is lower, companies often offer lower interest rates. However, there are some rules for making payday loans that can make it difficult to access, starting with the prerequisites!
Who can apply for a payday loan?
Automatic payday discount is the main feature of payday loans. Therefore, it is critical that the borrower be linked to a payday or benefit. Thus, self-employed professionals, for example, do not fit. Those who can apply for a payday loan include:
- Public workers;
- INSS pensioners;
- INSS withdrawals;
- Workers with a formal contract.
It is important to highlight that even being part of this group, the financial institution can still deny the loan application. This usually occurs when a person already has other payday loans on his behalf or does not meet any other prerequisite, such as being over 18 and under 80.
How to make a payday loan?
The process of hiring a payday loan is very similar to what you would do to contract other lines of credit. The main difference is that instead of looking for only the financial institution with the most advantageous rates, it is essential to make sure that it suits the company or public agency you work for.
Once this information is confirmed, the financial institution itself makes a simulation and contacts the agency or company to take care of all the procedures. Another alternative, especially for workers with a formal contract, is to look for your company HR first. In addition to informing which institutions are affiliated, they can also apply for the loan with the company on their behalf. From there, just sign the contract and wait for the release of money. Remember that the amount of installments will be automatically deducted from your payday.
Refinancing Property or Vehicle: A Good Alternative to payday Loans?
Despite the ease of hiring and the lower interest rates on personal loans, payday loans also have some disadvantages. For example, the amount released may be below what you need to accomplish your plans.
This is because, according to a Central Bank ruling, the value of the installment for the payday loan should never exceed 35% of salary. As the maximum repayment term ranges from 72 (withdrawals and pensioners) to 96 months (civil servants), the total amount of credit may be compromised. But, this is not the only reason to consider other loan arrangements!
The value of the fees can also make a difference.
In this sense, did you know that while payday-deductible loan rates are around 2 to 2.5% per month, those of secured loans start at 0.99% per month? More than that, the amounts released are higher and you can have up to 20 years to pay.
As for the prerequisites to apply, to apply for a refinance, you must have a vehicle or property paid off and on your behalf. It will serve as collateral in case of non-payment of installments. Remember that in refinancing, it is up to you to choose the best loan proposal.