When it comes to getting financing for a certain purchase, the important thing is to know what options there are and how they work. Thus, it is possible to analyze the proposals and recognize the one that gives us the most benefits. Here, we will analyze how it works and how to request a payday loan and we will offer some recommendations. Also, we will compare this option with a line of credit and you can clearly see what is your best alternative.
What is a payday loan?
A loan is an operation whereby a lender, a bank, for example, grants a sum of money to a borrower, in this case, the customer of the bank. That operation will be governed by previously agreed terms between both parties in which it will be stipulated how the borrowed money will be returned. That is, in how much time, how much will be charged for interest and other taxes and what will be the total cost of the operation.
How do I get a payday loan?
To take out a loan and be sure to get the most benefit, it is advisable to follow these steps:
1. Explore the options of products between various entities to be clear about what they offer.
2. When you reduce your options to a couple of entities, use online simulators to estimate the cost of your loan.
3. Then, you can compare the different costs to choose the cheapest one. It is important that you consider what the bank offers you in order to decide on the cost-service relationship.
4. Be sure to gather the documents that prove your identity, employment status and residence in the country.
5. Contact the bank you chose to begin the process to get your payday loan
What is charging interest on a loan?
This question is often asked by those who try to get a loan for the first time. Basically, we can say that the interest is the charge charged by the bank to the client for the service provided. That is, before you start, you will be informed of the percentage that will be applied to the borrowed money and that will be reflected in the extra money that you will have to pay when you return the amount that the bank granted you.
Therefore, when you inquire about the companies you have in mind, consider the costs they charge for the loan. Thus, by comparing the offers, you can get more advantage when you use the loan simulator.
A line of credit is a financial operation similar to the loan, but works differently. While with a loan you receive the money once and return it in a time agreed in advance; in the line of credit, the entity will deposit the money in parts. How? Enabling a credit card or an account from which you can withdraw money when you need it. Of course, that money will have a agreed limit according to the amount you requested, but you can renew the amount if necessary. There are two important points to keep in mind with the credit line: only interest is paid for the money that is withdrawn, but, this service usually has a higher interest rate than the loan. In general, the line of credit is not recommended for individuals, but for companies.
Tips to keep in mind before asking for a loan
To add information to the aforementioned, we recommend always taking into account several options before opting for one of them. Also, to avoid getting into debt, you must be sure that your monthly income and the usual expenses you have are in accordance with the cost of returning the loan.
Apart from this, a good advice is to verify that it meets the requirements that are needed at the time of requesting a payday loan. For example, if you are employed in a dependency relationship, you will be able to apply for a loan after 6 months working there without interruption. For those who are self-employed Monotributista, they must have 2 years practicing the profession to request a payday loan. In the case of those who are enrolled in the Income Tax, just having one year practicing the profession is enough.