What is a payday loan?
The payday loan or payday loan is a consumer loan that does not correspond to a given expense. The borrower has a set amount of money that he spends freely. The loan can be used to deal with a hard blow or Babarr a personal project such as a family event or a trip.
A payday loan can be assigned or unallocated and is repaid over a period of between 3 months and 5 years (or even 7 years depending on the institution). Its maximum amount is 75 000 €. Like any credit, the borrower repays his loan through monthly installments calculated according to the amount borrowed, the duration of the credit, the price of insurance and the rate obtained.
The difference between an assigned credit (auto credit, motorcycle credit, credit work …) and a payday loan is that you do not have to justify the amount of the purchase of the good or service from the lending financial institution!
The benefits of personal credit
The main advantage of a payday loan is that you can take advantage of the amount borrowed as part of a cash flow requirement. You have no justification to give on the use of funds, usable in one or more times, on one or more goods and services. This is commonly referred to as a credit without proof.
On the other hand, the payday loan has a fixed rate for the duration of the loan. As a result, you know in advance how much you have to pay in total but also every month in order to prepare for it. However, this interest rate is often higher than for the credit allocated to the image of a revolving credit.
How to obtain a personal credit?
To obtain a payday loan, the borrower can apply to a bank, a credit institution or any other financial institution authorized to offer consumption credits by the Banque de France. It should be noted that each structure offers its rates and conditions. It is therefore imperative to compare offers before committing.
The payday loan will only be granted if the borrower has a real repayment capacity (or borrowing capacity). Indeed, the debt ratio of the person or household must in no case exceed 33% of total income to avoid a complicated financial situation. This is why the lending institution asks you for a whole series of documents relating to your financial situation when you apply for a loan.
The amount of the personal credit therefore takes into account:
- the applicant’s indebtedness;
- its repayment capacity;
- the amount requested;
- the duration of the credit;
- the credit rate applied.
Legal conditions related to payday loan
Like any credit, a payday loan must be repaid by the borrower. Although financial institutions check the repayment capacity of each consumer, he / she must himself be sure to be able to repay the loan before committing.
A payday loan is considered valid at the end of the withdrawal period. This statutory period is 14 days from the date of signature of the contract. The validation of the payday loan is signified by the payment of the amount borrowed from the borrower’s account.
Warning ! A payday loan can in no way Babarr the acquisition of real estate or professional activity.
Each payday loan contract must contain certain information:
- the total amount borrowed;
- the duration of the loan;
- monthly payments;
- the annual percentage rate of charge (APR) and the nominal rate;
- the possibilities of early repayment;
- possibly insurance if you subscribe to the same establishment.
Find the best payday loan
To choose a cheap payday loan, the best solution is to compare the rates applied by different financial institutions. To do so, you can rely on the credit comparator Babar.fr which in addition to informing you about the rates in force, informs you about the conditions related to payday loans. Babar.fr also offers you to discover all the current promotional offers and so Babarr all your projects in the best conditions.
To do so, all you have to do is run a consumer credit simulation to access the online form. After filling out some information, you will have access to payday loan quotes in just a few minutes. Then choose the personal credit that best fits your project but also your budget.