If you are short of money, you can take out a personal payday loan to cover this period. But do not take looking for a loan lightly. By choosing the right formula, you can save hundreds or even thousands of euros.
There are loans of all shapes and sizes. If you want to install a solar boiler, you can apply for a green loan. People who want to buy a home can take out a mortgage. However, these loans are not available to everyone. If you want to take out a specialized loan, you must have the necessary documents. For example, in the case of a home improvement loan, you must be able to prove that you will use the capital for a renovation. Anyone who is unable to submit an offer or invoice will not receive a specialized loan.
- Benefits of a personal payday loan
- Play with maturity
- Align the term with the monthly budget
- Attention in case of small loans
- Consider a credit card
Benefits of a personal payday loan
But what if you want to buy new furniture, or have you noticed a widescreen TV? In these cases, you can take out a personal payday loan. Unlike a car loan, for example, you do not need to prove why you need capital. However, some restrictions are provided by law. For example, you can not use the money to fund an illegal activity or to buy a pet.
The freedom you get with a personal payday loan goes hand in hand with a higher price. While many lenders generally apply a flat rate for a specialized loan, the rate of the personal payday loan depends heavily on the duration and amount of the loan. It is not easy to find the cheapest product.
Play with maturity
The maximum duration of a loan depends on the loan amount. This is a legal requirement. Depending on the amount of the loan, the maximum duration is between 24 and 240 months. As long as the lenders respect the above mentioned limits, they are free to determine the loan term. Many lenders are trying to steer you in a certain direction. They do this by granting you advantageous rates if you keep your loan within certain limits.
If you wish to benefit from the lowest rates, it is preferable to limit the duration of your loan to 48 months. Different lenders are then willing to lower the rate below the 6% limit. This is the case for at least 12 of the 22 lenders (for an amount of 20,000 euros), according to our comparison. If we increase the duration to 72 months, this number will increase to 4. The number of loans available drops to 18.
Align the term with the monthly budget
Our calculation shows that in some cases you can save 1,500 euros or more if you reduce the duration of one year.
We take the example of the Rose Bank personal payday loan. Rose Bank applies a rate of 4.9% for loans of up to 72 months. The rate increases to 6.5% if someone chooses a longer duration. If you borrow 20,000 euros in this example and spread the loan over 84 months (instead of 72 months), the price will increase by more than 1,700 euros. Find out how much you can save by playing with different deadlines.
In the example above, the monthly payment increases by 25 euros if you choose a shorter duration. In this case, we can say that the final economy outweighs the limited increase in monthly payments.
However, the monthly repayments will become considerably heavier if you reduce the term. Therefore, always check if the rate drops sufficiently if you opt for a short time. Also calculate if the higher monthly payments do not weigh too heavily on the family budget.
Attention in case of small loans
Small loans are not attractive to lenders. Due to legal limits, the repayment period is limited. This means that the lender receives less interest. The longer the duration, the higher the accrued interest. They try to discourage small loans by applying higher rates.
For example, if you borrow 2,000 euros, you must repay the loan within a maximum of 24 months. In this situation, only two banks apply a rate below the 5% limit: Unionsave with Comfort Loan Plus (4.99%) and Buy Way (4.89%).
With the most expensive players, you pay 12.5% for a small loan. If you borrow 2,000 euros and spread the refund over 24 months, you can save 150 euros if you exchange the most expensive loan against that of Buy Way.
Consider a credit card
If you want to borrow a lower amount, you can apply for a credit card. If you opt for a principal repayment formula borrowed in the coming months, you do not have to pay interest. For other credit cards, it is possible to spread a refund over time. In this case, you will owe interest to the lender. The annual percentage rate of charge can reach 14.49%.
It is true that many credit cards come with many extras, such as travel insurance, non-life insurance, extended warranty … Want to know which credit card is right for you? Make the comparison here.
Soon, we will announce which are the best credit cards in our country. Keep an eye on our site!