A payday loans is a contract by which a financial institution offers us a certain amount of capital that we will have to repay in a specific term and with interest and expenses that derive from this operation.
Banks and other credit companies can offer us all types of loans, although one of the most common is usually payday loans.
These payday loans are also known as consumer loans, and depending on their purpose we can say that it is a loan for a car, a loan of studies or a loan for a vacation.
Of course, it is also good to know that although these loans are almost the same, there may be variations.
payday loans can help us finance a project, goods and / or services at a time when we can not afford it because we do not have enough liquidity.
To decide the consumer loan that we need, we will have to take into account some characteristics, such as the opening and cancellation fees of the loan, the interest rate, the repayment term and the amount of the installment, as well as other expenses.
What requirements are needed to apply?
If you are thinking about applying for a payday loans you will need to fulfill these requirements so that the entity can do a study and determine if you can make the loan payment. The documentation that you will have to include in your loan application include:
- The DNI
- A budget or an invoice to get the loan
- A receipt with your income
- A copy of the employment contract
- The relation of your patrimony (for the guarantee)
- Payment receipts (telephone, electricity, gas …)
- The deed of your home or, failing that, the rental agreement
- If that were the case, also receipts from other loans
What should we consider?
- Interest rate: The interest rate is what they will charge us for the loan. In addition to nominal interest we recommend that you look at the APR. The APR includes the nominal rate and also the commissions that can be applied to the loan, so it will always be a much more reliable indicator to compare different loan offers.
- Guarantee: In the case of payday loans, the assets, both present and future, of the person who hires it. So in case of default the entity will have a guarantee.
- Purpose and amount: Depending on the purpose we can opt for a more or less high loan. The entities are always going to verify that there is a certain logic between the amount you request and the purpose for which you are going to allocate the loan. In general, to request a payday loans, you must provide an invoice or budget so that they can make sure that the loan goes to that end.
- Repayment term: As a consequence of the risk, payday loans tend to have a higher rate and a shorter amortization period than, for example, mortgage loans.
Depending on the amount of the loan, the interest rate and the repayment period, we can determine the amount that we will have to pay in the monthly installment.