Getting extra cash in a pinch can be a real help in financial life. One hour the car breaks down, the renovation of the house does not start, unexpected medical expenses arise, the monthly payment of the child school is overdue, or the credit card debt continues to grow. At those times, ads like: “payday loan now!”, “Easy money and no red tape!” they appear as quick and simple options to get out of the pain.
But, as his grandmother would say, not everything that glitters is gold and, in the financial area, a wrong step can cause a lot of headaches. Therefore, we have prepared 5 important tips for you not to get involved in a payday loan.
The purpose of the loan
It is not always possible to acquire goods and pay bills on demand. In such cases, evaluate the purpose of the loan and try to use it to pay off expensive debts, such as revolving credit cards and overdrafts, or unforeseen circumstances such as a family health problem. Using it to buy a car, pay for travel or have more money for unplanned expenses can put you in an even more complicated financial situation.
Before making a loan, plan the payment
Be cautious when accepting proposals of soft benefits, as they are usually many! Before getting into debt, keep in mind how you will get out of it. Check if other big costs will arise, such as a child’s college or the purchase of a property, for example. Do not forget that unforeseen events can also occur, so avoid accumulating debt and prioritize cash purchases so as not to compromise your budget for a period as far as the eye can see.
Beware of loan scams
Knowing that there are many people wanting to get out of trouble, scammers have been gaining ground in the middle of financial loans. Be suspicious of calls and emails offering credit when you have not requested and never pass your personal data through these channels. And if you are asked for an advance to release the money, also be suspicious. Credible institutions are unlikely to ask for an application fee, guarantor or processing fee to release the loan amount. In addition to these precautions, always search the history of companies that offer credit, check for complaints and denunciations on the internet. Visit the site and ask all your questions.
Be aware of the fees charged
The interest rate on a payday loan represents the cost of using the money that will be provided. That is, interest is the amount that you will overpay for the advance of the money you need. So, nothing more natural than looking for the lowest interest rate among financial institutions, right? Yes, but don’t just rely on that. In addition to this fee, other amounts may apply and there are differences between monthly or annual payments. Ask them to inform you of the Total Effective Cost (CET), which includes all costs related to the loan, such as interest and taxes. Also pay attention to the contract and charges such as a fine and a stay commission, in case of delay in payment of the installments.
Pay attention to the payroll loan
The payroll loan is nothing more than a debt that will be deducted directly from your salary every month – without payment slips, bills or bills. So, before hiring him, look at this loan as a part of your salary that will not exist for a certain period. Among the types of credit, payroll deductions may have lower rates in the market, but investigate whether the company you work for has an agreement with an institution. By law, you can commit a maximum of 30% of your income, so be careful if you are offered a higher percentage!
Every loan must be made consciously and always thinking about the future! If you are clear about each of the things we have mentioned, you will have no problem acquiring, managing and paying off the credit. Remember that he is always a help, so do not let him become a problem.