Payday loans are gaining in popularity. This year, people borrowed 50% more than last year. There are many reasons for its popularity, including the fact that it does not need real estate collateral, it can be spent on anything, it has low interest rates, and if you have all the necessary documents and a positive credit rating, you can get the money you need. If you only need a few hundred thousand forints, a payday loan is better than an overdraft or a credit card. In this article, you will find out what you need to know before you take out a payday loan.
Before you take out a payday loan, it is important that you understand the most important things about it, so that you can make the right decision and find the bank that works best for you, where you can choose the best loan structure. You can get personal information at your bank branches, but if you have an internet connection and want to save time, it is easier to use the Varner family payday loan calculator.
Important notes before you take out a payday loan!
There are 5 basic conditions for taking out a payday loan
- Age: From the age point of view of taking out a payday loan, the lower and upper age limits are critical. Usually the lower age limit Ages 20-23 and upper 70-75, but this may vary from bank to bank. If the age required by the bank cannot be met, the credit institution may require the involvement of a debtor.
- Income: At least the minimum wage is required to take out a loan. It is true for all banks that the higher their income, the better the credit conditions will be. The type of income is also important because it is subject to different treatment if you come from your own company or find it as an employee. You should also be aware that credit institutions generally charge up to 30-40% of their income on installments. It is also important to note here that the expectation of income is increased by any loan in which it is listed as a debtor, co-debtor, or guarantor.
- Employment: Employee employment requires 3 to 12 months of indefinite employment. You cannot be on probation or notice.
- Bank Statement / Employer Certificate: A credit check requires a 3-month bank statement to be entered into the credit institution. The references and the incoming wages are carefully examined. If your income does not come from a bank account, but is paid in cash, the financial institution will require a certificate from your employer.
- KHR: Checks if it is not on the KHR list (BAR). Generally, if you are on the KHR list, you cannot get a loan until one year after you have been removed from the list. However, there are banks where you can get a loan from a KHR listed.
Currently, payday loan rates are very low, with an average income of 11-13% APR. The majority of payday loans are fixed rate loans. That is, the monthly installment is more predictable because it does not change during the term. Interest rate discounts are available when using an active bank account.
Is there a way to prepay?
According to the rules, the borrower can always exercise his right of prepayment. After a prepayment, the credit institution will reduce the total cost of the loan, including the original loan rate and other costs, in proportion to the prepaid amount. The bank may charge a prepayment fee if the prepayment is for a period when the interest rate is fixed.
The prepayment fee is as follows, from the date of the prepayment to the date of expiry of the loan agreement:
- if it is more than 1 year, then 1% of the prepaid amount is a fee
- if less than 1 year, 0.5% of the prepayment amount is the fee
- up to $ 200 once a year, the fee is $ 0
If you pay off your loan sooner, you are free to use the amount you would otherwise spend on your installment. If you can save the amount you paid monthly in installments, you could save it. If you have a specific purpose for which you are raising money, you may want to look for the most appropriate form of savings.
Do I need to open a bank account when taking out a payday loan?
It is not mandatory to switch banks to take out a payday loan, but credit institutions will give you a better rate if you transfer your income or use other services, ie open a bank account. However, if your income does not flow into a checking account, you should open a bank account.