Solve your 4 biggest payday loan questions

In times of crisis, the population is finding it increasingly difficult to maintain its financial balance. The rising increase in inflation and interest rates causes a sharp increase in spending, undermining family budgets. In this scenario, the payday loan, popularized for its low interest rates, appears as an alternative to relief in the accounts or even to restructure the finances.

The payday, however, still raises many questions regarding its characteristics. In this post, we will address the biggest questions about payday loans. Check-out:

1. What is the payday loan and why are its rates lower?

payroll loan

The payday loan is a type of loan in which the amount of the installment is debited directly to the payday. As a result, financial institutions, which set their rates based on transaction risks, find a higher level of security as the debtor cannot “escape” payment. Consequently, interest rates are usually lower than in other types of loans.

2. Who can hire a payday?

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The payday loan is not available to everyone. The modality can be contracted by the public servants – in all spheres, military and retired or pensioners of the social security, being forbidden to the holders of the most social security benefits. In private enterprise, workers with a formal contract from companies with more than 300 employees may take out a loan, but interest rates will not be low as in other cases.

3. What is the maximum value of a payday loan?

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The analysis of the maximum payday deductible amount takes into account the consignable margin which, as a rule, corresponds to 30% of the contractor’s monthly income. The percentage, stipulated by federal law, aims to preserve enough to provide for everyday expenses and possible unforeseen events. There is the possibility of hiring more than one payday, provided that the sum of the installments does not exceed the margin.

4. I used all the margin and I need a new loan, what to do?

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When a person chooses to take out a loan, or any other type of credit, the ideal is to readjust the budget in order to be able to repay the installments without compromising the finances. Still, there are circumstances where the situation may get out of control and a new loan will be needed.

In this case, before hiring a higher-interest personal loan or using the revolving credit or overdraft card credit, consider renewing the payday without increasing the installment. . Depending on the amount of parcels remaining, a good amount of change can be obtained.

Another alternative is to credit port to a financial institution that offers a lower interest rate. Moreover, although rates vary from bank to bank, for social security withdrawals and pensioners there is a ceiling, currently 2.34% per month, set by Social Security, and it is prohibited to charge interest rates above the percentage.

It is important to research well before making a payday loan, always looking for the best conditions and taking into account the impact of the installments on your budget. With the information presented, you can more safely evaluate the options available on the market.