The payday loan is a form of financing that is not tied to the purchase of a particular asset, but is recognized regardless of the reasons. familyfunresourceguide.com for more.
We are used to financing on cars and household appliances where rates are imposed without the possibility of negotiation and the reason for financing is tied to the good we are buying.
In the case of payday loans, on the other hand, a sum of money is always financed through a bank or a finance company, but the clauses and conditions that make up this loan are different.
This method of lending in technical jargon is called “consumer credit”.
The repayment plan of this investment is managed in monthly installments within a period of time specified in the contract. In practically all cases, a fixed rate is agreed for the duration of the repayment plan.
Differences between loan and credit
As we have seen, payday loan is a simplified version of a loan, as it is not bound by the purchase of a specific asset.
Mortgages, even though they are payday loans, differ from these in the methods of guarantees that must be left to the bank or to the financial company that must grant the loan.
Specifically, a substantial guarantee is required for the loan to obtain the loan and the applicant leaves the purchased house as a guarantee, which will be subject to foreclosure in the event of insolvency.
The payday loan differs from the mortgage for the collateral required. Personal guarantees are often required in payday loans, such as the signature of a guarantor, precisely because of the high risk that financial companies and banks expose themselves with this type of loan.
Examples of payday loans
There are as many payday loans as there are market needs, but the main ones are the following:
- Transfer of the fifth (If you want to know more read here)
Form of loan granted to public, private and retired employees with direct retention in the pay packet
- Loan delegation of payment
- Loan Trust
- Mortgage loan
Who can get a loan?
payday loans can be obtained on the basis of requirements that vary from institution to institution, but must in any case be subject to the regulations established by the Italia MoneyQuest Bank.
The selection criterion is quite simple in words, but in fact it gets complicated in different ways, you must be between 18 and 70 years old and to obtain financing you must be able to demonstrate your financial credibility.
All employees will be required to present their paychecks, freelancers will be required to file the tax return for the previous year, while pensioners will be asked for the pension slip.
The conditions vary according to the applicant’s financial situation, therefore the commitments already in place, the family income, the history of previous loans, etc.
In the event that a person is unable to demonstrate his economic solidity, he can still apply for a loan using a third person as guarantor in the event of default.
The amortization plan is a document that contains information relating to the loan repayment plan including the due dates, the total number of installments and the final totals.
This repayment plan is created by calculating on two installments: the interest portion, or how many interests we will pay for the loan we have obtained, the main portion, or the sum that exactly corresponds to the principal we have received. This division allows you to repay the interest first and then the capital received.
Simplifying, it is very easy that in the first months we will be subjected to higher installments to pay off interest as soon as possible and going forward over time we will see this quota decrease until we have a lower installment which only includes the capital quota that is missing.
Skip an installment, what to do?
It can happen to everyone to have an economic problem in a month and find themselves forced to skip an installment, or even just for forgetfulness or slight delay. In these cases, it is always advisable to contact the bank promptly and together with this find the best way to immediately return for non-payment.
Otherwise, certain procedures will be initiated that will bring our name to Criff reporting, going to set a precedent that will affect our economic credibility in the eyes of credit institutions.
Early termination of the loan
The early repayment of the loan is often not recommended because, as we have seen in the previous paragraphs, according to the repayment plan, we will pay the interest already in the first installments, and consequently it is better to keep the loan open and keep the liquidity in your account.
In any case, if someone wants to close the debt, it is always possible to do so by paying a penalty that is included in the loan agreement, which by law cannot exceed 1% of the capital still to be repaid.
Withdrawal of the loan agreement
The withdrawal of the loan agreement is only possible if you withdraw within 14 days of signing. The communication must reach the bank or finance company with which the loan was approved and this does not involve costs.