The rules to apply for any personal payday loan



When we ask any financial or bank for a personal payday loan, they will do a study of our economic profile and they will know if we will be able to repay the credit. The most common is that if an entity denies us a loan it is because it understands that lending us money poses a risk of default. Our income is one of the most representative indicators of our solvency against the repayment of the personal payday loan, but, in addition, other factors such as other debts we have are taken into account.

If we are going to apply for a personal payday loan, we can anticipate the financial company’s response by making this simple calculation: between 25% and 35% of your income is what you must allocate to pay loans, mortgage and credit card debt.

30% of your income should not go to debt

30% of your income should not go to debt30% of your income should not go to debt

The bank considers that if we go up from this percentage we enter into overindebtedness. Banks and lenders take this recommendation into account, so depending on the amount of our monthly income and our debt, they will grant us the credit or not. We speak of between 30% because depending on the situation of each person or family, we can increase or decrease that percentage. In that percentage, all the debts we have are included, so if we already have some type of credit, the mortgage for example, which represents 25% of our income, it will be difficult for us to obtain another loan.

For a family that has an income of about 4,000 dollars a month, perhaps they can afford to spend 35% of their income (1,400 dollars) on loans, mortgages and cards. Well, they would still have 2,600 dollars for the rest of regular expenses such as invoices. However, for a personal payday loan from a single holder that has a salary of about 900 dollars, allocating 315 dollars of this can be a mismatch in its economy, since it would only have 585 dollars for monthly expenses. These examples serve to explain that each situation is different and we have to be responsible when applying for any credit. Well falling into any default on any loan is usually quite expensive in the end for interest and late fees.

The other requirements of a personal payday loan

The other requirements of a personal loan

The solvency that we present with our regular income is one of the main requirements that we will be asked when accepting or not the loan, but there are some more. One of the main reasons for rejection is the inscription of our name in delinquent files. If we appear in some of those files, the banks will not lend us money and we will have to resort to private equity companies.

In addition to those described above, for us to be approved for a credit, it is necessary that we be of legal age and that we reside permanently in the country. We must always bear in mind that each entity or lender has its own concession requirements and they will not always communicate them. We also have to know that in the vast majority of cases they will not tell us why the loan application has not been approved.

The payday loan as an alternative to traditional bank loans.

In the case of a payday loan, the borrower receives funds from a private person (i.e. not from a bank or other credit institution) to make a purchase, have an urgent repair carried out, etc.

People who can give such a private loan are:

People who can give such a private loan are:

  • Relatives (e.g. parents, siblings, children)
  • Friends or acquaintances (e.g. school friends, work colleagues, club friends)
  • Crowdlending (e.g. via auxmoney, credit from private for private)

All lenders are “natural persons” and therefore do not count as “legal persons”, such as commercial banks. The legal requirement for payday loans (also called payday loans) can be found in Section 488 (1) BGB (German Civil Code).

The terms payday loan or payday loan are also used by banks, which describe a so-called consumer loan. These are usually granted for the purchase of consumer goods or the use of services.

Receiving a loan can benefit from a number of advantages that the bank does not offer for classic loans.

Receiving a loan can benefit from a number of advantages that the bank does not offer for classic loans.

The main advantages with payday loans are:

  • no Credit Bureau information necessary
  • low or no interest
  • longer terms can be agreed
  • lower rates are possible
  • less consequences for repayment difficulties

Lenders and borrowers cooperate on a private, trust-based loan, which makes agreements much more straightforward. The agreements are often limited, especially among relatives, and there are few or no written agreements. However, at least a rudimentary loan contract should also be drawn up for a private loan.

  • In a contract for a payday loan, the contracting parties should at least record the amount of the loan and the modalities of repayment. The contract must also be signed by both parties. In this way there will be no misunderstandings later and each party will have the most important contractual content in writing in the event of a legal dispute.

The lender can provide security if he does not pay the loan amount to the borrower in cash, but transfers it to his account stating the intended use “loan” or “credit”. In this way, in addition to the loan agreement, he has additional proof that money has flowed and that the recipient owes him this amount.

If you want to secure the borrowed money for a payday loan despite a close relationship with the borrower, you can ask for security. For example, an existing vehicle could serve as such. However, this should then be written in the loan contract. Ideally, the vehicle owner should hand over the vehicle letter to the lender until the full repayment.