Good payday loan in the bank and how to choose such a loan based on one parameter? And is it possible? What should you pay attention to if you want to borrow money cheaper?
The matter is very simple and easy … Is it for sure? The reason why we are looking for a loan or a payday loan is not important. It is essential that the choice of the bank is the best and the loan as cheap as possible.
The nominal interest rate on a payday loan
payday loan, like any other loan, we can check in terms of costs. That is to find out how much it will cost us to borrow money for a certain period of time.
However, we should not be guided solely by the nominal interest rate on the loan, because it is only one of the factors that affects the cost of the loan. The amount of interest on the loan depends on it. Nevertheless, banks like to display interest rates in advertisements: ” interest rate only 4.49% “, ” promotional interest rate 0% “, etc.
By the way, it should also pay attention to the promotional interest rates, because you can … “set up” in an unattractive loan. And it will not be a cheap payday loan. The promotion can only be valid for 3 or 6 months, and later it is normal and it turns out that the payday loan after analyzing the total costs is much more expensive than the competition.
Well, maybe it’s better to look at the total cost of the loan?
How to choose a good payday loan, ie the total cost of a payday loan
In addition to the interest rate, the cost of the loan is influenced by other costs, such as commission, insurance, administrative fees, for examining the application, etc.
As you can see when choosing an offer and a bank, we can not limit ourselves only to nominal interest. Low interest rates on loans (currently they can not exceed 10%), banks compensate for themselves by using, for example, high commissions or other fees.
For example, in one of the banks interest rates are only 4.25%, but the commission is over 10% of the loan value. Commission is over 50% of the amount of the costs paid!
We can not therefore choose a loan based solely on nominal interest, but you must compare the Real Annual Interest Rate (APR) or the total cost of the loan. The difference can be significant: from a few percent to even 20 percent. and more.
Payday loan additional information
Knowing that, apart from interest, we have to pay attention to other credit parameters, we can compare loans relatively easily. The most important thing, however, is to borrow only as much as we really need. Because what to overpay and take money to reserve?
So before we decide on a specific bank and its offer, we determine how much money we exactly need. A payday loan is not a revolving loan in your account and interest is charged on the entire amount paid, no matter what portion of the loan you use.
When looking for payday loans and when estimating loan installments, we can use the payday loan comparison and check offers. This is not a ranking of payday loans, but additional information about bank proposals.
We already know how to choose a good payday loan and what to look for when choosing it. We can also think about other solutions than just a payday loan. If the expenses are not too high, we can think about a credit card or a credit limit.