Payday loans can bridge short-term financial bottlenecks.
The term payday loan describes both the amount of the loan amount and the term . In general, there is talk of a mini or micro loan if the loan amount is between 100 and 3,000 euros and the repayment takes place in the period of 30 days to 6 months. In the traditional credit market, payday loans are not very important, as they are only suitable as a ” stopgap ” to bridge financial bottlenecks. Unplanned repairs or back payments, for example from the electricity supplier or in the operating costs, can put a payday loan on the agenda and let the small amount be regarded as a quick and practical solution.
This loan serves as a short-term supply of money, for which the lender demands a higher interest rate than other loans with small sums. For this, a payday loan is granted without a long wait and usually paid in the period between 24 hours and a few days. Due to the high interest rates, payday loans should serve as a last resort in the event of financial bottlenecks and be eligible if there is otherwise no chance of financial support or a cheaper installment loan .
Which payday loan providers are there?
In Germany there are some payday loan providers. A comparison is therefore possible and precludes the borrower from overpaying or receiving less money than needed. Because not only in the interest rate, but also in the loan amount, the offers differ. With the offerer amounts between 100 and 1.500 euro are possible with immediate payment.
As a payday loan Vexcash gives up to 3,000 euros and also convinces by the fast payout. In most cases, the interview with the house bank is not worthwhile, because the approval and award of special payday loan providers is faster. Due to the different interest rates and conditions for lending, even in a hurry, applicants should take the time to compare different payday loans and create transparency through the comparison.
The German providers are serious credit offerings that are issued according to the rules and regulations of the financial market. For this reason, an application may be rejected if the creditworthiness or the income of the applicant speak against a license.
Requirements for payday loan
Here the chaff separates from the wheat. For most providers, the conditions are easy to fulfill as they relate to residence in Germany and regular income. Other lenders require the opening of an account in their home and link the grant with the willingness of the claimant to open an account.
Whether a information is needed or left out, varies also between the individual providers. As a rule, a payday loan without information can be requested and approved. Especially with sums below € 1,000 the credit rating plays a subordinate role and is not a requirement of the lender. During a current insolvency proceedings, after submitting an affidavit or in the case of a present arrest warrant, a mini credit is excluded from the reputable provider. Unaffiliated claimants or in the case of orders for the waiving of wages can also be rejected. In these cases, mini credit without credit check can be a solution.
But whether the credit rating is actually not tested, can not be clearly verified in each case. Employees, the self-employed and freelancers with proof of income generally have a good chance of fulfilling the requirements for a payday loan. On top of that, if the is free of negative entries, the chances increase and the selection between the different providers increases.
What are the interest rates on the payday loan?
Interest rates are an important factor in borrowing. Even though payday loans are a relatively small amount, applicants should make an interest rate comparison. Because the differences are clearly visible and amount to between the cheapest and the most expensive provider whole 7 percent. The mini-discount rates on the cheapest offer are about 8 percent, while the most expensive provider calls for 15 percent interest.
With a loan amount of, for example, 1,000 euros, the interest rate difference in money can be quantified and illustrated more clearly. While the cheap payday loan 80 euros interest, you pay the most expensive provider 150 euros and thus a surcharge of 70 euros. Generally, interest rates on payday loans are very high and may continue to increase based on the lender’s risk assessment. Anyone who has received a rejection from the house bank and is therefore trying with a payday loan, can assume that he does not get the offer primarily for the lowest interest rate.
As with all loans, different factors are included in the interest calculation and should be compared on an individual basis. The high interest rate is the biggest disadvantage of the payday loan and therefore necessarily belongs in the comparison. With 8 percent, this type of loan is still relatively cheap, while payday loans with 15 percent interest often only lead to an aggravation of the financial problem.
How fast is the payout on payday loans?
The immediate payment, usually within 24 hours, is an advantage of the payday loan. Those who urgently need the money and can not wait will get a clear advantage in this regard. A direct demand from the credit provider is still worthwhile, since the payout speed is linked to different points. For example, if an account has to be opened with the provider, the 24-hour period after the account opening begins. The same applies to verifications. Here begins the period after verification and thus after receipt of the letter by the post office.
More and more payday loan providers rely on the identification of the applicant. Since this is possible via smartphone, the payment is not delayed and the money is really within 24 hours on the account. But you also have to calculate your own banking time. If the payday loan is requested on a Friday, the credit on the account may not be available until Monday. The deadline announcement of the lender relates to the payment made by him and does not say anything about the bank processing time of the recipient bank. For payouts with two to three days, the applicant can book a lightning transfer. However, this is billed separately and makes the payday loan more expensive by a not insignificant amount.