Payday Loan: everything you need to know before hiring

Payday Loan: everything you need to know before hiring

One of the options available in the market for those who need money quickly is personal payday loan . This modality guarantees a financial respite for the contractor, since it has easier access than other banking products and can be negotiated with the institutions, which provides better payment conditions .

Are you interested in taking out a loan or want to clear your doubts about it? In this guide, you will have all the information about personal payday loan , from your concept to its advantages and the process to get your release . Keep reading!

1. What is personal payday loan

1. What is personal payday loan

Is money granted by a financial institution or a cooperative, which has as its main characteristic the freedom to use it. That is, it is not necessary to indicate what will be its application , as it happens in the financing.

In exchange for this concession, the institution charges a monthly interest rate, which varies according to the company’s policy and negotiation with the contractor. Other factors may influence this value, such as the total loaned and the credit analysis of the client , which generates an increase in the charge for defaulting on defaults.

2. What is personal payday loan for?

2. What is personal payday loan for?

As the concept itself indicates, there is no specific purpose for personal payday loan . In this way, it becomes an option for any type of person, especially those who go through financial problems and those who wish to invest or expand a business .

The loan can be requested, for example, to cover the costs of a trip, such as airfare and hotels. It is also used to pay for a training course, which can be seen as an investment to improve your business or get a promotion at work .

3. How does personal payday loan work?

3. How does personal payday loan work?

In personal payday loans , the financial institution lends the money to a natural person, holding a valid identity document in the national territory. Since it is not necessary to inform the use of this value, it is enough to negotiate directly the conditions of the contract , like rate of interest and number of parcels.

The loan terms vary in each financial institution. Some customers have a pre-approved line of credit , that is, they only need to be requested to post the account. On the other hand, these institutions charge higher rates, which generally diminishes their attractiveness.

4. Who can take out personal payday loan?

The only obligation is that the contractor is over 18 years old , has a valid identity card and CPF and is resident in Brazil. Some companies often do not offer the loan to people who are denied credit analysis services , such as the SPC and Serasa.

An important differential is that any type of professional can apply for a personal payday loan – from an autonomous worker to those employed in public power or in the private sector. In addition, it is possible to find institutions that do not ask for guarantees , like a real estate or a car.

5. When to hire a personal payday loan?

5. When to hire a personal payday loan?

The main characteristic of personal payday loan is its ease and speed in negotiation . In this way, it is suitable for emergency situations , when it is necessary to invest a high amount to pay off a debt or solve an individual problem and there is no money available for it.

On the other hand, it can be used to lower some debt that has a higher interest rate . This is the case of overdraft and credit card, which exceed 10% monthly and compromise family income. Thus, there is a “swap” of debt for one with a better payment condition .

However, if the money is used to invest in a good installment, it is not advantageous to ask for the loan, since the interest rate is likely to be higher than the company’s monthly payments – large corporations offer payment in several interest-free installments .

personal payday loan is also an option for entrepreneurs, although there are other types aimed at this business, such as loans for micro and small businesses. First of all, it is necessary to perform a financial analysis of the business, which allows you to know your moment better and understand if there is room for new investments or if there is any need for capital urgently.

It is common for the entrepreneur to borrow this loan to start a business , which requires an expressive initial investment and often must be paid in a single installment. Thus, the interest rate monthly payments are paid with your profits in the first months .

In this case, it is fundamental to develop a good financial planning for the company, besides having guarantees that you will be able to pay the installments even in case of bad results. Loans range from 24 to 72 months on average, meaning you may have to keep this obligation for a few years.

6. What are the advantages of personal payday loan?

One of the main advantages of personal payday loan is its ease of acquisition . As your goal is to clear debts – credit card and overdraft – or to make an investment in a microenterprise , the contractor can get the credit quickly and easily through the internet or directly at the institution.

Because of this agility in the process, it is very suitable for those who need the money for an emergency , such as in case of health problems or debt. It can also be used for training and study, which will impact your daily work.

It is important to note that personal payday loan can be seen as an investment . For example, this mechanism can serve to make improvements in the rural property, which will make a difference in the billing of the business . In this way, it is more advantageous to pay the interest rate with a percentage of that profit.

Most financial institutions do not charge proof of income and no guarantees for payment. In addition, it is not necessary to state the reason for the loan , which contrasts with the financing, where the reason is stated in the contract – purchase of a property or a vehicle, for example.

Another advantage is that many institutions accept to grant credit for negatives . Despite this, it is common that the interest rate is higher , as a form of protection of the company in case of default. This option is not offered by large banks and should be used only in the latter case .

personal payday loan has important differences for payroll loans with regard to the target public and the form of payment. In the second model, the applicants are pensioners, civil servants or private and retired companies, and the payment of the installments is directly deducted from their payroll .

On the other hand, to get a personal payday loan, you need only have one account at a financial institution , be it a checking account or salary account or a credit card. Thus, the installments will be paid monthly with the combined rate , without automatic discounts or withholding payments.

The following is a compilation of the main advantages of this modality.

Emergency

Need to pay an amount that you do not have available in a few days? In this case, personal payday loan is the most appropriate option, because of its ease . With few documents and often no credit analysis, the customer receives the money in full and can negotiate the terms of payment .

Due to the financial crisis , many people are unable to maintain an emergency reserve , which is used just to cover these situations. Hence, borrowing becomes the only viable option for meeting the commitments and not borrowing.

Use for any purpose

Since it is not necessary to inform the institution of the reason for the loan, the client can allocate it for any purpose – including more than one. This means that there is no control over the use of money , as in financing, where the acquisition of the asset is conditional on the payment of the installments.

So, such a loan can serve for the realization of a dream , such as a trip, or even for a course or a college. In this case, it should be seen with a long-term investment, however with a payment made within a few years.

Creation of a new business

Do you have a business idea to put into practice or do you want to invest in something that already exists? personal payday loan is a great alternative because of its attractive rates and the possibility of not having collateral in some cases. With the quick receipt of money , this whole process is optimized and the entrepreneur can privilege his time in the company itself .

It is also possible to invest in an existing business , where there is a need to allocate more resources or there is a chance of growth. In this case, the interest is paid with the company’s own income, which allows the entrepreneur not to compromise his personal finances .

Remove or reduce debts

Compared to the revolving credit card rates and overdraft interest rates, personal payday loan is a more advantageous option . While the former have, on average, between 12% and 15% per month, it is possible to find rates lower than 3% in the market with the loans .

In this way, the indebted client can “exchange” the debt and pay it with a loan, which would reduce the monthly installment . This mechanism is recommended to “unburden” personal finances , but proper planning is needed to avoid getting into debt again with the new monthly payments.

Made by the internet

Another interesting possibility is to make the loan application online . There are already financial institutions that are completely online, the so-called fintechs, which offer these products with smaller bureaucracy. However, it is important to analyze whether the company has market experience and can offer competitive rates .

Cooperatives also operate on the internet, where it is possible to apply for the loan. For those who want to ask questions and negotiate in person, there are several service stations throughout the country that guarantee solutions and social inclusion for farmers and microentrepreneurs / small business owners.

7. How do you plan to take out a personal payday loan?

Although it is an easy-to-access solution, personal payday loan should have the right financial planning , as your goal is to get rid of debt and not incur new ones. Therefore, it is important to look at a few points before hiring it . Check some below!

Definition of purpose

The personal payday loan does not oblige the contractor to explain its purpose to the financial institution, but you need to have it set in your head . The reason is simple: It’s impossible to know how much you need money if you do not have a goal set .

If the loan is to increase the production of your rural property, design what improvements you want to implement and how much it will cost. With this account made, you can move forward in the planning of the loan without asking for unnecessary money .

Calculation of total required

Do you know exactly how much credit you need to achieve your goal ? During your research, financial institutions may offer loans that are higher than necessary, which increases interest on the transaction . Therefore, it is very important to negotiate the exact amount to lower costs .

As the loan is paid monthly , it should be understood that a portion of your income will be committed to that payment. In other words, when closing the account, it is necessary to consider whether there are conditions to pay for this increase in expenses or whether it will be necessary to request a larger total amount.

Calculation of monthly installments

Once you set the total loan amount, the next step is to calculate how much you can afford each month . This will directly impact the number of installments, since a smaller amount indicates more months of payment and, thus, a higher incidence of the interest rate.

The most recommended is to pay the highest amount possible per month, which reduces the number of loan months . However, it is worth stressing that this money can not be a reason to generate more debt , which would make the loan not worth it.

8. What is needed to get personal payday loan?

8. What is needed to get personal payday loan?

There is no mandatory list of documents that must be submitted to the institution when applying for a personal payday loan. However, the identity card (RG) and the Individual Register (CPF) are unanimous, mainly for the verification of information.

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