When you need extra money for an expensive purchase, operation or renovation, for example, taking out a payday loan is a good solution.
In this article we would like to tell you more about a payday loan and what you should pay attention to before you take out it.
What is a payday loan?
A payday loan is a loan for which the interest, the monthly amount and the term are fixed. You take out this loan with a lender and make agreements about the amount to be borrowed, the term to maturity, the amount that you repay per month and the interest that you pay. You take out the loan for a specific purpose. You can borrow for study , the purchase of an expensive purchase or, for example, the renovation of your house. When you take out a payday loan and your application is approved, you will receive the loan amount in one go. You then repay the loan on a monthly basis, part of which consists of repayment and part of interest.
Taking out a payday loan involves a number of conditions, such as the term in which the loan must be repaid. The term determines how long you will be paying off the loan. You make agreements about this with the lender before you take out a loan. The minimum duration is 6 months and a maximum of 120 months. The loan must be paid off by the age of 75 at the latest.
With a payday loan, the interest and the amount that you pay off each month is fixed. This gives a lot of certainty, because this way you know exactly what you spend each month repaying the loan and how long you are paying off.
The interest rates vary considerably between the different lenders. If you want to take out a payday loan, it is therefore wise to compare the interest rates of lenders with each other. Why would you take out a loan somewhere with a certain interest rate, while you have to pay less interest with another lender? You can quickly save a lot of money if you choose a loan with the lowest interest rate.
There are various lenders who all offer their own loan services. It depends on your personal situation which credit provider suits you best. For example, there are credit providers that specialize in car loans, flash loans, renovations and so on. The government protects consumers when it comes to credit. As a result, you can compare the different providers and they must purchase sufficient information about their services. Do you regret taking out a loan? Then you can cancel the contract within 14 days.
Why take out a payday loan?
- Purchase car, boat or caravan
- Medical procedure
- Remaining debt
- Home improvement
Note the conditions
If you are not blinded to the interest rates, you should certainly take a look at the other conditions that a lender applies. Do you want to pay off earlier or redeploy the loan during your term? Then you may be faced with a fine at some providers. Do you want to prevent this? Then it is advisable to carefully read the conditions that apply during the selection process.
A BKR listing can have a negative impact on taking out a payday loan. When you take out a loan, the lender is obliged to report this to the Credit Registration Office. BKR then checks whether it is justified to provide the loan, they do this through a financial assessment. We look at how you are doing financially. Based on the outcome, the lender determines whether you can take out the loan or not. Are you already in possession of a BKR listing? This can have consequences for taking out the loan. If, for example, you have a negative listing in your name due to late payment in the past, you can no longer take out a loan. If you have a positive listing, you can take out a loan, but then you have the chance that you can only borrow up to a certain amount.
If you want to borrow an amount between € 2,500 or € 75,000, you can take out a payday loan. But sometimes you have to deal with a situation where you need a certain amount of money quickly. We call these types of loans mini loans, or flash loans. With this type of lender you can borrow a small amount, up to 1500 euros, with a short term (maximum 2 months). This is useful if you are temporarily out of money; for example, your salary will be paid later or you will have a one-off unexpected expense that you cannot finance at that moment, but you can later.