In the midst of the crisis we are experiencing, it is more than normal for more people to borrow to settle debts or deal with emergencies. Thinking about it, we decided to create this post.
The objective is to present the different types of loans possible and what are the advantages of each one (personal, payroll and revolving loans). We will explain how each one works.
Want to know what types of loans are available, their advantages and the most suitable according to your profile? Keep following our article!
Types of Loans and Their Characteristics
This modality is requested from a bank or financial agency, by signing a contract. Before the contract is approved, a full assessment of the documentation provided by the applicant must be performed.
The hiring is usually done very quickly and is quite affordable. However, you need to be aware of the interest rates that are charged – and can be quite high – and the deadline for repayment.
In this case, the maximum limit for monthly payment is a maximum of 30% of the salary of the applicant. In addition, the interest rates charged in this mode are much lower than those charged for personal loans, for example.
The main disadvantage of this type of loan is that the repayment of the installments is made by the payroll discount, but this also contributes to the lower interest rates, as mentioned above, due to the guarantee of receipt.
The revolving loan is linked to the use of credit card. If the amount paid on the invoice is less than the total amount, the user automatically borrows the remaining amount from the bank for payment.
In turn, the bank makes the payment of this amount, but it is charged on the next invoices, with interest that is often very abusive. The advantage is the flexibility to pay and prevent the user from entering credit protection services.
However, while these advantages seem attractive at first, this type of loan should be avoided at all costs because of the stratospheric interest rates that are charged when it is activated. Here are some questions you should know about your credit card!
This is one of the types of loans that most closely resembles staff in terms of advantages and disadvantages. However, the main difference is that in this case there is no need to hire.
Normally, banks already release it as a limit embedded in the checking account and it can be used at any time. However, attention should be paid to interest charges, which are also often quite abusive.
For all types of loans we quote in the post, there is a very high interest charge. Therefore, ideally they should be used only when there is really a need for money.
Still, of the options presented, the payroll loan offers the best conditions in terms of interest collection.
The main tip is that finances are well organized and well planned, avoiding over-budgeting and resorting to these options.