Let the first stone throw the one who never had to borrow money. Well, I believe it will be a lot of people who won’t have to throw this rock, but the fact is, it’s always good to be prepared for this kind of situation.
Here are some tips so that if you need to, you can spend less when taking a payday loan:
1. Before hiring a payday loan, organize your finances:
The right way to get a payday loan starts well before hiring itself. You need to keep up with your financial control so that you know if the loan will lead to a runaway home budget. The question that must be answered is, “How much can I pay monthly to repay the loan, without my bills going red?”
For this you need to know how much you spend and how much you earn, which should be left as a monthly savings and then analyze what can still be committed to the loan.
2. Escape the “very easy” loans:
For those who will lend you the money, the biggest risk is your default. That is why there is all that paperwork when it comes to applying for a payday loan, with huge entries, lots of questions and an analysis of your conditions and financial history. All this to try to reduce the risk of default.
So make no mistake, if this bureaucracy is smaller, as in the case of “pre-approved” credits, there will be a trade-off: most likely the interest charged will be higher.
3. Search, search search
Remember that buying a financial product (in this case, the payday loan) is like buying any product. One must know very well the characteristics of the good to be purchased and compare the prices and conditions in various places.
Unfortunately this is a very neglected point: for convenience, people end up borrowing from the financial institution where they already have an account as it is easier and faster. But that has its price.
Another tip is to look for smaller financial institutions that generally offer better interest because they don’t have a very large fundraising network.
4. Do not analyze only the interest charged, analyze the CET.
Total Effective Cost (CET) consolidates all loan-related costs. It includes the interest, the various fees involved and the taxes. This is a much more complete indicator when comparing different financial product options.
5. Do not borrow!
This last tip is kind of obvious, but we have to mention it! The ideal is to take no debt and pay everything in cash. Of course, there are exceptions (some cases of long term loans or when the good to be purchased will be used professionally to generate more revenue), but the general rule is: only buy one good or service when you have all the money in your pocket! So you save on interest and can even ask for a discount.