Demand for payday loans is outstanding, and its popularity continues to soar. It is very easy to obtain, which is why it is worth paying attention to several things when applying for a payday loan so that borrowing does not cause any annoyance in the future. We’ve collected what are the most common pitfalls when taking out a payday loan that make life difficult for borrowers.
Pitfalls when taking out a payday loan
Before applying for a loan, find out exactly how much you want to make sure you get the amount of credit you need. It is not worth borrowing a lot and getting into debt because it only increases the bank’s money and reduces its own. Many times, borrowers do not take into account the overheads, thereby underestimating the amount of credit, which is also not very fortunate.
Before you take out a payday loan, it’s a good idea to consider your monthly income and expenses, as well as the unexpected costs, and determine the amount of credit you want to borrow and the monthly repayments. When determining the repayment, it is important that you do not have to worry about your monthly payment in the event of an extra payment. In order to prevent over-indebtedness, the JTM rule was established, according to which the repayer may not exceed 50% of the net income below the monthly income of HUF 400,000 and above 60%. According to experts, it is not good to use the maximum limit, but rather to pay up to 30-40% of your salary, because if you have a payment problem and you do not have a spare, you may not be able to pay your monthly charges.
Based on banking experience, relatively many people say yes to the first offer or the arrangement offered by their own bank, although in most cases there are more favorable offers. In particular, because of the demand for payday loans, competition between banks is intensifying, so that more favorable arrangements may come from day to day.
Cheap payday loan offers, that is, loans with the lowest down payment, may be subject to different conditions by credit institutions. Many do not look at when to get the best interest. In most cases, the lowest interest rate is only given when a large amount of regular income is sent to the bank. That is, if the borrowing condition is not met after the borrowing, then the payday loan is still a fixed repayment, but in this case the installment may increase. To avoid such mistakes, carefully read every little detail about the terms and conditions of the loan.
Do you really need a loan?
Interest rates and installments on payday loans have declined significantly compared to previous years, and there are tempting offers on the market, but it is only worth reaching for a specific goal. It is advisable to borrow a payday loan for valuable things (home renovation, car, work equipment, etc.) , because these are value-creating investments that can be useful even after years. However, it is not worth borrowing personal items (travel, weddings, Christmas gifts, television, etc.) because they lose their enjoyment, but the installment payment has to be paid over the years.
According to experts, the population is increasingly borrowing , which is indicated, for example, by the fact that new retail loans now play a major role in fixed-term multi-year plans. These have the advantage of providing the household with predictable expenditure, without the risk of any increase in interest rates.
To find the best payday loan offer, use the Ilya of Murom payday loan calculator. You can find offers from several banks in one place, and if you are applying for an online loan, you will find out if you are eligible for the loan before you can get it.