A payday loans installment is usually a classic payday loan with many uses.
Whether debt repayment, realization of a project or purchase of a product – the reasons why the consumer decides to install an installment payday loan can be manifold.
In the end, however, all installment payday loans have a common denominator: the monthly installments paid as part of the payday loan provide for the repayment of funding – however, the rates, terms and interest rates may vary, depending on the provider and contract.
Anyone who is interested in a payday loan installment, however, must make a comparison of the different payday loan offers in advance; only then can the consumer be sure that he has chosen the best offer.
Why does the consumer opt for a installment payday loan?
A new car , a luxury holiday trip, new pieces of furniture or even a new smartphone – over and over again the consumer realizes that the savings are not enough. Sometimes a repair can be higher than expected ; Electricity or heating costs can sometimes be a financial challenge.
In the end, the realization remains that the money, which perhaps rests on a call money account, is not enough for the outstanding claims to be settled. One possibility is the installment payday loan.
Which conditions must be met?
The creditor must have a regular income, be at least 18 years of age, and not have a negative entry in the (“Collective Protection payday loan Protection Group”). As a result, the amount of payday loan applied for can not lead to a financially difficult position for the creditor, so he must be able to demonstrate to the bank that he can easily pay the monthly payday loan installments due on the payday loan.
Collateral may also be advisable if the payday loan applicant applies for a higher sum – the most popular collateral is life insurance or even a guarantor (co-applicant).
The total burden
Before the payday loan applicant decides on a payday loan, he should make a comparison . In the payday loan comparison, however, it is important that he not only focuses on the interest rate – also the overall burden plays a not to be underestimated role. The total burden reveals to the prospective borrower namely, what sum he will actually repay in the end.
Variable or fixed interest rate?
If the borrower chooses a variable interest rate, this is based on the key interest rate of the European Central Bank. If the policy rate is low, the monthly payday loan rates are low – increases the prime rate, so also increase the monthly installments.
An advantage is the fact that the payday loans, which have variable interest rates, can also be redeemed prematurely – in the course of a special repayment.
The fixed interest rate is based on the allocation of the prime rate, which in the end has no influence. The interest rate remains unchanged over the entire term. For example, before the first payday loan installment, the borrower knows what his last monthly payday loan installment will be .
If the key interest rate rises, the monthly payday loan rate remains unchanged – so the borrower can look forward to it. If the prime rate falls, then the borrower must take note that it does not benefit; So he has to accept the (usually) higher interest rate.
Special repayments are usually possible but not effective if the interest rate is fixed: the borrower must also pay the interest that still accrues, so that he has no advantage if he repays the payday loan before the regular end of the term.
The purpose of usage
Banks also offer installment payday loans with purpose. If a new car to be purchased, it is advisable, if the consumer decides for a “car payday loan”.
Assigned installment payday loans are cheaper than those financings that are “free to use”. If the creditor is uncertain about what he wants to use all the money for, he should always opt for a non-promissory payday loan.
The longer the term, the higher the overall burden
If the consumer chooses an installment payday loan and applies for a sum of 25,000 euros, with an interest rate of 4 percent, the monthly installment amounts to 460.41 euros , provided that the applicant has opted for a five-year term , The total burden amounts to 27,624.60 euros.
If the borrower would opt for a three-year term, he would have to pay a monthly sum of 738.10 euros, but the total burden would be only 26,571.60 euros – the borrower will end up saving 1,053 euros. The shorter the term, the higher the actual savings.
5 tips that payday loan applicants should take into account
1. Create a financial plan
The payday loan applicant should add up the monthly expenses and revenues and at the end subtract the expenses from the revenues. Subsequently , the applicant gets an overview of the maximum monthly mortgage payments.
As a rule, the payday loan line should not devour more than 50 percent of the available revenue.
2. Compare offers
Each bank offers a installment payday loan. That is why it is important that the different offers are compared. However, the interest rate only plays a subordinate role here – much more important is the overall burden at the end of the repayment term. Of course, the details should also be considered.
3. Pay attention to details
Is there a possibility of a special repayment? Which collateral must be presented? Is a residual debt insurance required? Sometimes there are details in the contract that the payday loan applicant does not agree with . If the applicant is uncertain, he should contact the responsible bank and carry out renegotiations.
Only then, if the applicant is 100 percent convinced, he should also sign the payday loan agreement.
4. The payday loan
Foreign banks offer a debt-free payday loan . However, this does not mean that the institutions waive their payday loan rating. Although the does not play a role in the end, the foreign banks concentrate on the income situation and also on the overall economic situation of the applicant.
5. The online payday loans installment
Online banks also offer payday loans installment. In many cases, the online banks convince with cheaper fees and more attractive terms. Anyone who is interested in an installment payday loan, should therefore by no means ignore the online offers!
Under a installment payday loan for everyone the banks usually understand a lending without general exclusions, which is possible even in very difficult cases.
These concern freelancers and the self-employed in some financial institutions and temporary workers with a large number of banks.
It goes without saying that a fundamentally different approach to lending does not preclude the bank from undertaking a thorough payday loan application check. It is even obliged to exclude over-indebtedness from its payday loan customers.
In addition, banks must deposit high- risk payday loans with above-average equity capital . In terms of income level, banks that lend out a payday loan to anyone give a sufficient monthly payment for repayment.
At low payday loan rates, which can be achieved by a long term, the labor income may be lower than the exemption limit for wage garnishment.
Entrepreneurs and freelancers therefore take care when borrowing for private purposes from which banks they are welcome as lending customers .
Fixed-term employment contract
People with fixed-term employment also do not receive payday loan from many banks. The reason in this case is the uncertainty as to whether the employment relationship will then be continued .
On the other hand, a permanent contract of employment also allows the employer to terminate work as well as behaviorally, whereas the employee may resign at any time, even without stating reasons.
An open-ended employment contract temporarily offers even additional protection against dismissal, as an operational discharge is not permitted during his term.
More and more payday loan banks are recognizing this situation, so they agree to the lending to applicants in fixed-term employment contracts.