For smaller purposes – if we need a few hundred thousand or a million or two million to cover some of our near-term expenses – we can take out a payday loan. Banking arrangements for larger amounts are usually referred to as loans.
Let’s take a look at the market, what trends do we see, what are we worth deciding on?
Interest rates are getting better
As a positive change – due to the lowering of the central bank base rate – compared to previous years, we also find interest rates on payday loans below 10% . This type of loan is relatively expensive; Larger and longer term loans tend to be more favorable to the customers, as the bank is better looking for them even with lower installments. However, anyone who is looking for a small amount of construction that is freely available should choose one of these. Previously, home loans were characterized by interest rates below 10%, we currently find payday loans at 8-9% interest rates, and it is worth focusing on these offers.
A favorable interest rate is only to be enjoyed if it is stated in the offer that the interest rate is fixed throughout . Where this is not highlighted, we can expect rising interest rates, which can be adjusted, for example, by the forint exchange rate; therefore, we cannot calculate exactly how much the loan will cost us at a given maturity.
Since borrowing is a financial risk step – as what happens to us, our work, our careers, our families in the future – we should minimize the risk by choosing predictable, realistic loans.
Don’t just look at interest
It is worth noting that interest is not the same as APR . The latter is an indicator of the total cost to the customer, including management fees, appraisal fees, and interest.
This is the real compass that shows what the costs are to be taken into account in total, and it is no coincidence that a government decree has been made obliging banks to highlight it in every offer. In very good cases, with a high borrowed amount, the APR goes down to around 10%, preferring to stay above 20%. But of course, the decline in interest rates also led to a decrease in APRs and led to better deals .
Long or short term?
With the same offer, looking at different repayment times will reduce the total amount payable over a short period of time, but we will need to make more monthly payments. It puts a smaller burden on us on a monthly basis – which is therefore more feasible for many – but overall we do not get better if we pay over a longer period.
In summary, payday loans save you a lot when you are careful: you should choose all the features of each offer and weight it.