But how does this happen? And is this option worth it for those who need money? These are some of the questions we will answer. Are you curious? Keep reading then!
What is payroll loan?
Payroll loan is different from others because it pays directly to the employee’s or retired salary. Because of this “guarantee”, interest rates are usually lower than other loans. You may have noticed in the advertising cited that the product offered is accompanied by “INSS retirees and pensioners”. This is because credit companies more easily accept people who have already stopped working and receive social security.
The reason for explaining this is easy: pay is guaranteed while private workers may be laid off or change jobs. That is, there are more risks to the financial. This is not to say that there are no payroll loans to employees of private companies. However, you need to go to the human resources department of your company and ask which is the financial partner that offers this service. Since payment is made directly by salary, there must be a connection and partnership between the company you work for and the finance company.
Positive points of payroll loan
There are a number of positives and negatives when opting for payroll loans. The lower cost of interest payments is a pretty cool point for the customer as the weight of each installment will be less. This is lower because the risk of default is also lower as we are talking about an immediate withdrawal rather than having to wait for the payer to separate the money and make the payment on their own. Another plus point is not having to remember deadlines and still being punished with the possibility of paying fines. As the withdrawal is immediately down payment, there is no need to remember the date and risk paying even more fees.
Speed in the process is also handy, especially if money is used in an emergency. There is less bureaucracy as there is no need for a credit or collateral analysis. Finally, because of the strength of their liaison with their source of income (directly), lenders are more open to those who provide this service. So if you are a bank with accounts, you do not necessarily have to be an account holder to get the credit granted. Another normal deterrent that will not apply to payroll loans is being negative. This does not matter to the creditor – usually – because the installment money will be withheld directly from your salary.
All of these points are quite positive, especially the issue of lower interest rates. But of course not all are flowers.
Negative Points of Payroll Loan
There are some negative points in opting for this type of credit. The clearest is not being able to count on the salary in its entirety, since it is already discounted upon receipt. But it is noteworthy that there is the mitigating that there is a limit of 30% imposed for this payment, since more than that can seriously compromise the income of the borrower.
Another downside is not being able to apply for a second loan before settling the first, as the commitment is stronger and your income is more compromised.
These are points that need to be thought of. And it’s up to you to evaluate if the positives are stronger than the negatives.
What can I use for a payroll loan?
There are several uses for the money made with a payroll loan. Let’s name a few of them that may apply to your situation.
I have a debt and would like to pay it
Having a debt can be a big problem for a budget, especially because interest, monetary correction and fines can make the cake grow and run out of control. Applying for a payroll loan can be of great help here, as you can use the amount to pay the outstanding amount and handle the smaller, smoother, monthly installments of your salary.
I want to grow professionally and I will take a course
These days it is critical that the professional always stay up to date and learning. Being able to use the money earned in your current job to pay for a course that will make you grow is a great investment. And with the lower payroll loan interest this step forward is possible.
I’m traveling with family, but I don’t have so much cash
The family has gained members, you want to take a break but your account is not so stuffed. Is this situation familiar? So evaluate it well and figure out if it is not better to take a payroll loan instead of paying interest on the travel company’s installments. Paying cash is always a great deal because you can get discounts and with the payroll loan you will have very palatable interest. Thus the trip will not bring bad situations in the months following it.
As always the important thing is to research
The most important thing when making a large purchase or making a commitment such as a finance or loan is to research. When it comes to payroll loans, the following idea is the same. The importance of good planning is even greater because you won’t be able to count on part of your salary for a long time. This requires a course correction and even some possible sacrifices.
But keep in mind that this sacrifice is for a greater good. Especially if you take a payroll loan to repay a debt: it is quite likely that the interest on payroll loans is much lower than the interest on debt. And so it is worth borrowing to pay backlogs. But beware: do the math, put it all on paper and a spreadsheet and don’t do crazy things.