Need to finance a project that is important to you, or to bail out your bank account? The personal payday loan can be quite timely in this kind of situation. As a future borrower, would you like to know everything about this type of credit? It’s normal! A pioneer in peer-to-peer lending, Creditstair tells you how to calculate the rate of a personal payday loan and gives you a detailed presentation.
What is a personal payday loan?
Before you even look at the personal payday loan rate, it’s important to know exactly what this type of credit is. The personal payday loan falls into the category of consumer loans. This is an unallocated loan. The borrower (or debtor) does not have to justify the nature of his project, as it would be the case for an assigned loan. In other words, he can make use of the amount borrowed as he sees fit. This money can be used to finance any type of service or consumer good (health or school fees, marriage, travel, birth purchases, appliances …). It may also meet a need for cash. A personal payday loan can be granted by a bank or credit institution. As with any loan, the borrower must first build a file with a number of supporting documents, in order to finalize his credit application. Commonly required supporting documents are:
- A valid identity document (national identity card, passport, residence or residence card);
- A bank or postal identity card;
- Proof of address (gas, water, electricity or fixed telephone bill);
- Proof of income (last tax notice and, optionally, last certificate of family benefits, or last pension or salary slips).
Note: Obligations and Responsibilities of Enhanced Lenders
Since the Lagarde Act of 2010 on the reform of consumer credit, any lender is required to check the creditworthiness of the borrower, and therefore its ability to repay.
personal payday loan rate: how does my bank calculate it?
The personal payday loan rate is set freely by each bank or credit institution. However, it can not in any case exceed the rate of wear. The latter is defined by the Banque de France. It corresponds to the maximum threshold that lenders are allowed to practice when they grant credit. Goal ? Protect the borrower from possible abuse. But beware, we are talking here about the APR (annual percentage rate of charge), and not the nominal interest rate (still called the borrowing rate or bank interest). The nominal rate is only one constituent element of the APR.
The APR is an essential factor in a consumer credit offer. Expressed as an annual percentage of the amount borrowed, it includes, in its calculation, all the fees imposed by the bank granting the loan. The APR thus reflects the total cost of credit.
In the case of a personal payday loan – and more broadly, a consumer credit – the APRC includes, in addition to the nominal rate, all or some of the following:
- Application fee ;
- Costs due or paid to third-party intermediaries intervened in any way whatsoever in the granting of the loan (broker, for example);
- Account opening fees;
- Account maintenance fees;
- The cost of using a means of payment (payment and debit transactions);
- The cost of mandatory guarantees (to deal with the risk of unpaid bills that would not be covered by insurance);
- The cost of borrower insurance (optional).
Good to know: some important details on borrower insurance
In order to guarantee the correct repayment of the monthly payments, the lender can oblige the borrower to take insurance, even if this one is optional. Otherwise, he will refuse his file. It’s his right. Nevertheless, the borrower can quite choose another insurance than the one offered by the bank or credit institution granting the loan.
How can I find the most interesting personal payday loan rate?
To find the best personal payday loan rate, and thus realize your project with greater serenity, one solution: compare! As noted above, the APRC expresses the total and actual amount of credit, at least in the case of a fixed rate loan. It is therefore the best point of comparison between the different offers of personal payday loan. Whether it comes from a bank or a credit institution, any loan offer must mention this rate.
The APR is a key indicator. It allows the borrower to instantly measure the competitiveness of a particular bank. Of course, the higher the APR, the higher the total cost of credit. The term of repayment of the credit also plays on the APR: the more monthly payments, the more it will be revised upwards.
Do you know the barometer of personal payday loan rates?
In advance of his personal payday loan application, and whatever his project, the borrower has every interest in doing preliminary work. This happens, as we have just seen, by the comparison between the loan offers, but also, and primarily, by the consultation of the rate barometer. The idea for the debtor is to know the rates in force. The goal is twofold. Depending on this data, he will be able to:
- make a realistic simulation of personal payday loan;
- and skim off loan offers more easily.
Even though the barometer rates do not have the value of an offer, they allow the borrower to have a fairly precise idea of the monthly payments that would be his. On the simulators used, it’s up to him to play on the loan duration to consider different possibilities. But we insist on one point: it should be kept in mind that if the amount of monthly payments decreases by extending the repayment period, the total cost of the loan will ultimately be higher. The reason is simple: the loan rate is proportional to the duration of the loan.
What are the conditions for accepting a personal payday loan?
To obtain the personal payday loan that will allow him to give a concrete form to his project, the debtor must have sufficient borrowing capacity. The borrowing capacity is the income available to the borrower once the monthly loan payments and its expenses are honored. If these prove to be insufficient, it is not surprising that the bank will refuse his request for a personal payday loan.
Other factors may work in his favor and encourage the bank to follow him in his project, among which:
- his level of seniority;
- his age ;
- professional stability;
- the good management of his account.
personal payday loan: a solution for your project, two types of possible rates
On each credit offer, the borrower should also pay attention to the type of rate charged. Indeed, the rate of a personal payday loan can be either fixed or variable (or revisable). The operation of one and the other is completely different.
As the name implies, a variable rate will fluctuate over time, throughout the credit repayment period. The APR indicated on a variable rate consumer credit offer is therefore entirely indicative. It may go down as well as up, depending on the evolution of the financial market. This can potentially involve a higher total cost. As a result, the variable rate personal payday loan poses a risk to the borrower.
The fixed rate personal payday loan
Conversely, in the case of a fixed rate personal payday loan, the rate will be stable throughout the term of the loan. The refund amount will be the same each month. Admittedly, the borrower will not be able to benefit from a possible fall in interest rates. But the advantage, and not least, is that it will know the total cost of credit in advance, when signing the contract.
Why apply for a personal payday loan at Creditstair?
Fintech launched in 2009, Creditstair is the first credit institution approved by the French Prudential Supervisory and Resolution Authority (ACPR). Our mode of operation is unique in France. We collect money from professional investors and then lend it directly to the borrowers. We act as an intermediary between those who want to invest and those who want to borrow to realize their project. Investors include individuals, insurers or foundations.
At Creditstair, for a small amount (less than € 3,000), the borrower enjoys an unbeatable personal payday loan rate. Here are some of the other advantages that differentiate us from conventional credit organizations:
- Thanks to the digital signature, the borrower no longer has to return his paper file to validate his credit application. This allows him to speed up the processing of his file and quickly set up his project in case of acceptance.
- Whatever the loan amount, the early repayment is free.
- We offer one type of credit: the fixed-rate personal payday loan, which is amortized and risk-free for the borrower, unlike the revolving credit or even the floating rate loan.
- The postponement of monthly payments is not part of our offers: it extends the duration of the credit, and therefore its cost.
The personal payday loan rate is a determining factor for the borrower. Discover the rates offered by Creditstair via the free simulator available to you, and make the comparison!
The three key points to remember about the personal payday loan rate
- It is the annual percentage rate of charge (APR) that includes all costs related to this type of consumer credit (borrowing rate, cost of borrower insurance, cost of collateral required to obtain the loan agreement). …) and represents the total amount.
- Borrower insurance may be included in the APR: although optional, the bank or credit institution may require it, but the borrower remains free to choose a third-party insurer.
- The borrower has every interest in turning to a fixed-rate personal payday loan offer: this ensures him constant monthly payments throughout the credit period.