A real Swiss consumer credit knife, the personal payday loan allows an individual to borrow money to buy a product or service, go on vacation or change car… In short, you can do what you want with a personal payday loan, except buy a property. Only true condition: commit to repay in a staggered manner in time at the signing of the contract.
The main features of the personal payday loan
What is it used for?
The personal payday loan is part of the family of consumer credit. Reserved for individuals, it can borrow up to € 75,000 to finance a punctual need, whatever it is, except a real estate. Once your file is accepted, you receive the full amount borrowed to do what you want.
With a personal payday loan, you can go around the world, finance your child’s study abroad, buy the latest fashionable flat screen, take your wife on a honeymoon in the Seychelles, or pay the fees. lawyer for your divorce.
A flexible loan
It is necessary to distinguish the affected personal payday loan from the unaffected. For the latter, no need to justify the use you plan to make with the money borrowed. Although your bank advisor will often be unable to stop you from asking you to use it, the law does not require you to answer.
Because unlike an assigned credit, the amount borrowed is not tied to a specific purchase.
The only constraints and conditionalities
In the case of a personal payday loan, you will have to make a commitment to repay it according to the precise terms defined by the loan agreement. Depending on the provisions of the Lagarde law, the personal payday loan agreement must be written and must meet the obligations common to all consumer credit.
After verifying that the borrower is not registered in the National File of Payment Incidents (FICP), the lender must provide for signature to his client a pre-contractual fact sheet, summarizing the resources and the expenses of the borrower.
The contract itself must include a box in the header with all the characteristics of the loan:
- type of loan,
- affected or not,
- amount of loan and deadlines,
- duration of repayments.
The nominal personal payday loan rate and the APR (the annual percentage rate of charge), which includes not only the borrowing rate but also all ancillary costs, such as administrative fees and accessories, must also appear in clearly legible characters..
Then comes the total cost of credit, corresponding to the sum of all the monthly payments, minus the amount of capital borrowed. Generally, a revocation coupon is included in the contract to give the borrower the option to reverse his decision within 14 calendar days, since the Scrivener Act. You will then be able to waive your credit without any fees or proof.
As the personal payday loan is a repayable loan, the maturities are constant and include repayment of a portion of the capital borrowed and interest. The duration of the loan can vary from 3 months to 7 years and is the subject of a depreciation plan, specifying for each repayment date, the amount of the maturity, its decomposition into interest paid and capital reimbursed, and the share of capital remaining due.
The elements to watch for a favorable loan
The interest rate
As in any credit business, the interest rate is undoubtedly the most important element to compare before choosing the offer. Moreover, Meilleurtaux.com offers a comparator of credit conso to go around the credit organizations in less than 5 minutes. In your comparison, do not stop at the promotional rate displayed on an advertisement, but rather you are interested in the APR which includes all ancillary costs.
In this regard, since the borrower insurance is not mandatory, it is not included in the APR, unless otherwise indicated. Even though the purchase of a death and disability insurance policy is recommended for a large loan, you are not required to sign it with the lender. Again, playing the competition can save you a few euros.
Early repayment terms
Since its implementation in 2011, the Lagarde law specifies the conditions for early repayment of all new personal payday loan contracts. Below € 10,000 redeemed early and per year, no penalty can be claimed by the lender. Beyond this amount, the lending organization may demand compensation for the shortfall of unbilled interest. It must not exceed 0.5 or 1% of the amount refunded, depending on the remaining term of the loan.
By making this early repayment, you will have to choose between keeping the loan term, but reducing the amount of the maturities, or keep the amount of the maturities and decrease the term of the loan. In any case, keep in mind that it is advisable to take advantage of an unexpected cash flow to reduce its debt, especially with the rates charged in some investments nowadays, such as the Livret A you will gain by prepaying your personal payday loan.
In conclusion, the personal payday loan is a relatively easy way to get money for a personal project, and it will cost you significantly less than a bank overdraft or revolving credit.