A payday loan is a form of financing for private consumption. There is a very large selection of these payday loans. Funding opportunities and providers. A distinction is made in the banks’ range of payday loans between loans with and without a credit-dependent interest rate.
In the case of loans without an interest rate dependent on creditworthiness, all customers of the bank receive the identical interest for the term of the loan. This means that the general default risk of all customers is also apportioned to customers with stronger credit ratings. As a rule, the interest rate level for these payday loans is generally higher.
There is a payday loan with an interest rate based on creditworthiness
With this payday loan, each customer is offered an individual interest rate. The interest is within a price range set by the bank. Each customer therefore receives a different interest rate which is determined by a rating system.
The term of a payday loan is usually between 12 and 120 months, with some providers only up to 84 months. The payday loan is repaid in constant installments. Special payments are possible by arrangement. An early repayment of the payday loan is possible with a notice period of 6 months in accordance with the German Civil Code.
The payday loan is also available in the contractual form of the credit facility. With a credit line, the loan amount is always revolving. This means that the loan can be used again and again after approval, without the lender having to be approved again. The interest rate on this of the payday loan is variable and is thus adjusted to the respective market conditions.
A payday loan does not require collateral
It was granted by the banks blanco. Optionally, the customer can take out insurance against death, unemployment and possibly incapacity to work. These insurers cover the remaining amount or, alternatively, the credit installment insofar as one of the named and insured risks occurs. In any case, protection against inability to work is recommended. Nobody can rule out an illness, and when the case arises, everyone is happy if they don’t have the expense.
In summary, when taking out a payday loan, comparing the different providers is important and advisable. The different offers have all advantages and disadvantages. It is important to decide which provider gives you the most benefits for your payday loan. The cheapest provider is not the cheapest!