What is a Personal Payday Loan?
May 13, 2019
Daily life is full of surprises. Despite our best intentions, we sometimes find ourselves in precarious and unexpected situations. For a person who has little money aside and has to make an expensive expense, the personal payday loan can offer an efficient and fast solution.
Given the many companies that offer the personal payday loan, it is necessary to make an informed decision to avoid the unnecessary and costly risks that this loan can generate. So, it is important to understand the particularities of this loan which has advantages as well as disadvantages.
The personal payday loan is convenient because it can finance personal projects, such as holidays or the development of a house or the purchase of a car. Since this is a credit transaction, it saves the individual from saving money or saving for many years.
It can finance many projects without justifying the destination of the funds borrowed, so the use of the credit is totally free.
Of course, free does not mean free or unconditional, so it is important to learn well before ending up in an even more difficult tax situation. Despite the less restrictive conditions of a personal payday loan, it is nonetheless a tax liability with interest rates and must on repayment according to the terms of the contract.
The personal payday loan
The personal payday loan is a type of consumer credit, just as the revolving credit or credit affects. Many families use this flexible solution to meet their daily needs or projects they care about.
The personal payday loan is a credit granted by a bank or similar organization. Credit is often used for current debts but sometimes is used to pay off past debts. Then there is the credit agreement between the bank and the borrower. The bank stipulates the amount, the repayment period, the credit rate and the terms of payment and the amount of the monthly payments. It should also be noted the fees that vary from one bank to another, so it is important to understand the operation of this loan.
Who can access the personal payday loan?
In principle the borrower must be over 18 years old and must be a good saver with few personal debts to be able to honor the repayment of the personal payday loan.
It is necessary to have a stable, professional and sufficiently profitable job to repay the loan over a defined period. Recent pay slips are often required to build a loan application file. There must also be some seniority in the job. In some cases, a dismissal may affect the study of the file. It is then desirable not to be stuck on the National File of the borrowing country. The bank can do some research to make sure the tax reputation of the individual.
Who can help make an informed decision about personal payday loan?
There are many different ways to make sure you make an informed personal payday loan. First, the Credit Guide can help compare credit offers. These offers must mention the APR (which is the annual percentage rate of charge) and with a personal payday loan comparator, it is then easier to have access to the best proposals on the market. There are many sites that facilitate this task and help to compare the anticipated costs.
Credit simulation can also be useful for assisting with finance planning effectively. A credit simulator can predict the capacity of the loan but also anticipate the amounts to be paid each month for repayment of receivables. Credit simulation services are easily accessible via the internet. Since a personal payday loan is much more expensive than the actual amount granted, the simulations make it possible to quickly compare several loan proposals.
Another possibility is to hire a personal payday loan broker. A broker is a financial intermediary. Its purpose is to find the most advantageous interest rates on the most interesting terms for the client. The broker will therefore compete with different financial institutions. It will help decide the desired amount of the loan, the project financed by the loan and help to choose the best institution according to the tax situation of the individual.
Like loan comparisons, it is possible to compare brokerage companies since the rates vary from one company to another. Broker prices vary depending on the type of project and the amount borrowed. In general, it takes about 5% of the amount bought back for credit redemptions. And of course, it is possible to negotiate brokerage fees. It is also legally impossible for a broker to receive any remuneration before the conclusion of the loan agreement.
What are the terms of repayment?
The loan offer must indicate the term of repayment, the amount of the loan and the terms and conditions of prepayment. The borrowing period must be greater than 3 months. There is no maximum duration but in practice personal payday loans do not exceed 7 years or 84 months. The amount is between 200 and 75 000 €.
It should also be noted that the authorized debt ratios are 33% of income, so the loan amount can not exceed this cap.
According to the Consumer Code, if the amount is less than 10 000 € you will not have to pay prepayment benefits (IRA) Beyond this amount IRAs vary from 0.5% to 1% of the amount of the loan.
The personal payday loan is a loan repayable at the Annual Effective Rate, or APR from 2.90% to 9.90%. It is from this rate that the total cost of the loan is calculated.
He is required to pay the monthly installments during the loan period and if possible pay a larger sum if a cash flow permits.
In case of deadlines
The personal payday loan is convenient in case of an emergency or expensive purchases, but what to do in case of other unforeseen costs and financial delays? It is then possible to postpone deadlines if you are in difficulty of payment. Generally this report is granted twice a year but not more. Thus repayment of the loan is suspended until a later date. It must be taken into account that if the borrowing period increases, the total cost of credit can also increase.
How to choose a bank or institution?
With all the offers of personal payday loan it is possible to play the competition. Since each bank offers a different credit rate, you should know that by negotiating it is possible to obtain a lower borrowing rate than the one announced. For that you have to go around the banks, present your project, resources and ability to repay.
According to the rates that banks indicate it is possible to tell a bank that another has presented a better interest rate. It is then possible to negotiate according to your contribution and repayment capacity. The more the bank takes a risk, the higher the rates can go up. It is then necessary to know if it is more desirable to have a fixed or variable rate according to your criteria. Of course, it is better to have a fixed rate, since the floating rate may fall but since it is based on inflation, it will tend to increase.
The advantages of the personal payday loan
The advantages of a personal payday loan is that it offers a lower rate than consumer credit and revolving credit. It also offers a wide protection to the consumer through the rule of not exceeding the wear rate. This means that the loan is governed by the code of consumption and the credit is adjusted to the needs of each borrower.
The repayment is flexible and it is possible according to the rules of the bank to make a prepayment partial or total without any costs to pay. This is not the case for example with the mortgage.
For a consumer who is often short at the end of the month, the personal payday loan may allow the account to never be discovered. It helps to avoid a situation of over-indebtedness.
It is also possible in some cases to pay off earlier than expected without paying penalties, which is not the case for all loans.
The disadvantages of the personal payday loan
In contrast to appropriations that have various insurance, the personal payday loan has no insurance in case of default when buying a property, so we must ensure the quality and delivery of goods because even if the sale is canceled you agree to repay the credit.
Thanks to the Lagarde law, it is possible to choose an insurance issued by another institution than the lender. However, the new contract must have the same guarantees as the one offered by the bank that finances the loan.
personal payday loan precautions online
It should be noted that on the internet there are many loan sites and agencies with attractive ads but it is important to protect themselves from these sites and do their research.
In France, the only organizations authorized to grant loans are banks and credit organizations such as Meteclem or Sofidis or other reliable companies. These organizations are listed by the CRPA, which is the Prudential Control and Resolution Authority.
Another way to search for the company is through ORIAS which is the sole registry of Intermediaries in Insurance, Banking and Finance.
If a credit organization does not appear in the CRPA or ORIAS data, it must be concluded that the company is not reliable.
In France, registration in the trade and companies register is an obligation, which is certainly the case from one country to another.
Contact data should also be verifiable with an address on an official directory, such as Yellow Pages.
The crooks also do not hesitate to steal the identity of existing companies so check the RCS which is the company’s trade register and the same as the one on the site. The phone numbers should also be the same.
It is recommended to check the email associated with the domain name. And finally, if in the course of the transaction the site invokes various expenses, it is surely a scam.