Requesting a loan is something that, sooner or later, you can find yourself doing at least once in your life. Even if you are the biggest savers in the world, you may always find financing needed : to buy a new machine , for a new refrigerator, or to finance the expense of a degree course or a trip .
If you have never applied for funding, there may be some ” dark ” points to which you may wish to find an answer. In this article, therefore, we will address and explain the key factors to take into consideration to find the best personal payday loans, the ones that best suit your needs. and circumstances.
What do you need?
The first thing is to know the purpose of the loan so that you know the type of financing to seek . It is not the same to apply for a loan to buy a car or to follow a course of study. The difference could lie in the interest rate, in the total amount of money that can be asked for or in the method of repayment (for example, the transfer of the fifth is repaid in a different way compared to a personal payday loan ).
Analyze the loan market
With the internet, everything is very easy. You can simply visit the various sites and comparators to find the banks that offer the best loans on the market, what are the characteristics and conditions of the financing. In this way you can get a better idea of what the market offers in the personal payday loan sector.
Calculate the monthly installment of the loan
Carrying out the calculation of the loan installment is important because you can have a better and more precise idea of how much to pay month after month. In the calculation of the monthly fee, other ancillary expenses, such as opening or managing the case and loan insurance must also be included.
An important decision is the one concerning the percentage of monthly budget to be allocated to the repayment of the monthly installment. Usually you should not reserve a percentage greater than 20% of your monthly budget to the amount of the loan installment.
Do not forget the interest rate
Generally, personal payday loans have an interest rate of between 8% and 12%. The key thing in choosing a loan is to opt for the one at the lowest possible rate. To be considered that the comparison must be made using the APR ( Effective Annual Global Rate ) because this is the interest rate which includes all the ancillary costs associated with a loan (excluding the cost of loan insurance, which is optional except for the transfers of the fifth, for which instead they are mandatory coverages).
Remember that there are two types of interest: the APR and the TAN.
The APR (annual percentage rate of charge) is the interest rate that indicates the overall expense of a financial loan. The APR is calculated according to a mathematical formula which takes into consideration the nominal interest rate of the loan, the repayment frequency of the installments (monthly, quarterly, etc.) and ancillary costs.
The TAN is the cost that a loan has only and exclusively for the interest rate.
Don’t forget the ancillary costs
Loans have many associated expenses, the most common are:
- cost of opening the loan : the expense related to the opening of the loan contract is usually calculated as a percentage of the sum requested (there may be a minimum). Although not all banks say so, these charges are not to be incurred if the bank refuses to grant the loan
- loan repayment cost : an expense that is calculated as a percentage of the amount of money repaid early. Usually this value is equal to 1%. in any case, it can never be greater than the interest cost to be paid in the event that the loan continues to be repaid
- installment collection fees : these are periodic costs that must be borne for each installment that you pay. They represent the expenses that the credit institution incurs when collecting the installment
Read the contract carefully
As you do with any financial product, it is essential to read the contract carefully before signing , even the smallest indications.
If you have questions or don’t understand something you should always ask before signing.
The law protects you
A final point that many people are unaware of is that the law allows you to repay the loan at no cost and without explanation within 14 days of signing the contract . If, on the other hand, the contract has been executed, even partially, the customer has 30 days to withdraw by repaying the capital obtained, the interest accrued up to that period and the costs that the bank has incurred.
If you have other questions, tell us in the comments, we will be happy to help you.