Payday loan: how does it work?

In this post you will find the main information about this type of loan, including the specialized loan for domestic.

Purpose of the payday loan

Intended for individuals, the payday loan is one of the credit solutions offered by banks and financial institutions for those who need extra money quickly and easily, whether to settle debts, make purchases or invest in something of their own, for example.

payday loan features

  • The contractor must be between 18 and 65 years old and reside in Brazil
  • Subject to credit analysis
  • There is no need to leave any assets as collateral or for sale
  • Total Effective Cost (CET) and interest rates vary from one financial institution to another
  • Not all banks or financial institutions grant this type of credit to negative results
  • The installments are paid directly by the contractor through automatic debit, bank slip or post-dated check (non-consigned credit)
  • The customer chooses the due date of the installments
  • Usually approved within 24 hours

What is Total Effective Cost (CET)?

What is Total Effective Cost (CET)?

The Total Effective Cost corresponds to the total cost of the operation: interest, fees, taxation, charges and insurance and is described in the contract as an annual percentage (%). That is, it can be understood as the amount that the bank charges for providing such a service.

Therefore, it is very important that the borrower is aware of not only the interest on the installments, but the amount of the transaction that includes the CET. After all, lower interest rates do not mean that the loan will be cheaper, it is necessary to take into account such costs embedded in the operation.

So, if you are thinking of taking out a payday loan, it is worth the tip: do research in various banks or financial institutions always using the same amount and term and pay attention to the CET, as each institution has its policy and costs can vary from to each other. That way, you’ll be able to compare and choose the one that will fit best in your pocket!

Payday loan interest rates

Personal loan interest rates

One of the characteristics of the payday loan is the ease in releasing the resource, in most cases. To compensate for this ease and speed, banks and financial institutions impose high fees, precisely because they do not have the guarantee that they will be paid.

Interest rates can vary widely from bank to bank. See in the example how much you would pay per month if you applied for a loan of $ 1,000.00 divided into 12 installments, comparing the best to the worst rate:

3.30% – $ 1,227.24

9.00% – $ 1,675.80

In this case, researching the lowest rate brought savings of $ 448.50 in its share.

Payday loan for negative

Personal loan for negative

Whoever has debt is called negative and is under some important restrictions: enrolling in private educational institutions, opening a current account and, among others, applying for loans.

Most financial institutions deny credit to this public due to the high risk of default. On the other hand, some companies are specialized in serving customers with this profile, but with high interest rates, which may exceed even the amount charged by credit card or overdraft.

Therefore, if there is a risk of default, interest rates will be high, which leads us to conclude that the payday loan for negative accounts may not be the ideal solution.

Make a detailed survey of your debts and try to renegotiate them directly with the companies, so as not to make the loan just another burden on your debts.

Payroll loans can be an alternative

But, if still, you consider that requesting funds from financial institutions is the solution to settle your debts, payroll deductible credit can be a good option for negative ones.

Payday loan for those with low scores

The score is the score that qualifies consumers between good and bad payers. In other words, it means the financial reputation of each person.

On a scale of 0 to 1000, the higher your score, the better qualified you will be by banks. The default risk scale is defined as follows:

0 to 299 – high risk
300 to 699 – medium risk
Above 700 – low risk

It is important that consumers pay attention to the payment control of their bills, as the variables to measure the score are: bills paid on time, data referring to negative debts and financial relationship with companies.

Widely used by banks and financial institutions, the credit score is a resource that assesses the granting of credit and minimizes the risk of offers, in view of the consumer’s ability to sustain the debt.

The lower your score the more difficult it will be to hire credit on the market, however, with an internet search you find a range of financial options that release loans, as well as credit cards for people with low scores.

Specialized loan for domestic employees

If you are a domestic worker, registered worker and arrived here because you are looking for loan information, you are in the right place!

The credit analyzes of banks and financial institutions, for the most part, bar the approval of loans for this category of workers.

Lack of proof of income (due to a large portion working autonomously) and not having bank transactions through a current account, are the main factors.

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