Payday loans – short explanation
A short explanation about the payday loan.
There are many reasons why you want to take out a payday loan such as borrowing money for a large purchase that you would otherwise not be able to pay in cash or a nice opportunity or a trip that will come. A sudden release that you had not anticipated. In all these cases, a payday loan is the perfect solution.
In contrast to, for example, the mortgage loan, there are fewer conditions attached to the payday loan. When the bank has all your data at its disposal, it can quickly assess the credit application. Indeed, there are few additional conditions. The amount of the payday loan is transferred to your own account and you can usually dispose of this money freely. This is in contrast to, for example, a car loan where the bank often directly transfers the amount to the seller’s account. With a payday loan, the bank naturally receives fewer repayment guarantees. Certainly if we are going to compare this with a mortgage or car financing. For that reason, the interest rates are also somewhat higher.
It is also interesting to know that you, as a private consumer, can always repay your loan early. This is easy and with low costs. Borrowing money under the old system meant that the bank could still charge a serious fee if you wanted to close the file early. The bank was entitled to so-called reinvestment interests. This has not been the case for several years. If you take out financing early, you only pay an additional three months interest. Borrowing money in the form of a payday loan therefore becomes more interesting. If you have a financial windfall in the future, you can use that money to pay back the loan taken out quickly.
The perfect payday loan with the right info
Every loan that you take out is registered in a central database. Even if you do not have overdue loans and you have always repaid your payday loan properly and on time, you will still be quoted. Any other bank and lender can consult this information. In the past this was not the case. Back then it was only known who was on the so-called “black list”. Good payers who were not blacklisted could sometimes borrow money from various banks without these banks being aware of it. This is now absolutely no longer the case. Therefore, always honestly and clearly state that you have other loans outstanding. The financial institution where you apply for the payday loan will still find this online. It can give a very bad impression if you do not provide the correct information. Moreover, it is prohibited by law.
Finally, an important comment. Many customers do not realize that Visa cards and credit cards from supermarkets, for example, are also considered as outstanding loans. Namely, when you have a Visa card, you can take a certain amount with it. Usually in the line of 1250 to 2500 euros. Even if you have no outstanding amount outstanding, the bank takes this into account. You can use this money reserve at any time.
A Visa card is therefore also considered as a form of borrowing money. Anyone who has too many Visa cards and such can find it difficult to get an additional payday loan. The financial institution will inform you of this. Usually it is sufficient that you cancel one or more of these cards. Because there is no outstanding debt, this is very easy administratively. If you still have a negative balance on a certain card, then of course you must first clear it.