Payday Loan, or personal credit, is one of the ways to get money without placing a property or car as a guarantee of payment. The amount received in the checking account plus interest rates and other amounts will not be deducted directly from the individual’s payroll, but will have to be paid during the period negotiated with the financial institution before closing the contract.
Who can get a Payday Loan?
The general rule is that the person is over 18 years old and can prove his ability to honor the commitment and pay the installments of the Payday Loan. And that check will be done by the bank or financial institution before authorizing the release of the money.
Usually, the company will seek information on the market about the reputation of the client applying for the loan. This task is to gather as much information about the person’s good or bad pay history.
Some companies known as credit bureaus, such as Fine Bank and Across Lender Group, usually maintain a kind of register with this information. He assigns a kind of score, known as a credit score , which can accredit or disadvantage the release of amounts.
Assessing who borrows
It is also common for some companies to adopt specific criteria to define whether or not to grant this credit line requested by the customer.
Good Lenders, for example, takes advantage of users’ in-depth knowledge of their financial lives to help credit partners offer virtually personalized options. So much so that in most cases it is more advantageous to take a loan on the Good Lenders platform than at the user’s own bank.
Reasons to get a loan
In this period of concern with the advancement of the new coronavirus in Brazil and in the World and the effects of these uncertainties on politics and the economy, it is quite common to worry about what may happen in the short, medium and long term.
It may even be that these fears make some situations difficult, disadvantage some businesses and force some people to seek extra money, but besides this atypical situation there are other reasons for someone to suggest you:
– “Ask for a loan !!”
- Unexpected Spend
- Insufficient financial reserve
- Imbalance between earnings and expenses
- Exchanging expensive debt like overdraft or credit card debt
- Attempting to open your own business, invest in it or prevent it from closing
- Unique chance to complete the amount needed to get a dream off the ground
But whatever the reason, it is essential to remember that the money in advance needs to be paid off. And as life goes on, it will be necessary to reconcile the usual expenses with the home and family with the installments established by the financial institution.
Care that needs to be taken before taking out a loan
So before hitting the hammer and choosing the credit line, the watchwords need to be: simulate and compare offers. This can be the guarantee of finding the best condition to not damage your budget and regret it up front.
In the midst of fintechs and technology, you don’t even have to leave your home to do that. All major banks , financial institutions, digital institutions offer virtual simulators to find out payment terms and installment amounts before closing the deal.
Another precaution that must always be taken is to pay attention to the values of the advertised rates. Many places have a nominal interest rate and when you pay the first installment the amount is higher. It was missing to include the other costs of the process. So always try to know the CET rate on the loan . It is she who reveals the total cost of the loan and the total and true amount that will have to be paid.
Documents required to apply for a Payday Loan
The requirements may vary depending on the financial institution in which the negotiation is being carried out, as well as how to deliver these required items, which can be physically delivered to an agency or with the electronic support of the internet and the transfer of scanned documents.
It is common for companies to try to see if the person asking for the money is really the person they claim to be. In addition, proof of residency (to ensure where that person is located in case of problems) and documents proving their monthly earnings are also required in the credit analysis.
With this information, institutions are able to assess the risk of not being paid and decide whether the person can take out the loan. In case of a positive answer the final step is to release the money in the indicated current account and monitor the payment of the installments within the previously agreed term.
In case of refusal, the person needs to resume the research process and knock on the door of another institution to try to be able to release the amount they need.
What if the installments are not paid?
If the loan amount is not paid properly, the company or financial institution may include the name of the borrower in the list of defaulters. But for that you will need to wait at least 15 days. The most common is 30, 45 or even 60 days of waiting.
In addition, the company still needs to notify the customer of the intention to include his name in the list of debtors of the Credit Protection Service.
And even with the name pending you can still get a Payday Loan. The only problem is that not all companies can accept this condition and close a contract.
And those that go ahead and release the requested amount end up charging a kind of compensation either in the form of higher installments or higher interest rates. The alleged reason is that the risk of not being paid is greater, which is why they need to be careful and increase the range of guarantees.