Simulation of a payday loan
If you have found a suitable payday loan from a reliable lender, you may be tempted to borrow more than is required to achieve your goal. This would allow you to do some shopping without worrying about prices or buying the laptop of your dreams without saving for months.
If you borrow more money than you need, you will also need more time to repay the debt and you will pay more interest. In this case, the final cost of the loan and the cost of the monthly payments may be much higher. Borrowing more money can even put you in financial trouble if you can not repay the debt owing or you do not have enough money for your personal needs at the end of the month.
Avoid overdue payday loans
If you repay a payday loan in installments, you simply spread the cost of the loan over time. Instead of paying (your purchases) at one time, you spread the cost over a longer period. During the term of your payday loan, however, you have agreed to honor the pre-established payment obligations.
The longer the term of a payday loan, the longer there will be monthly repayments and the more interest there will be on the outstanding balance. The total and final cost of a payday loan can therefore be very high. On the other hand, you will have a growing financial margin over the months. Before choosing the term of your loan, it is therefore essential to study all options and identify the most advantageous loan. It is important to strike a balance between these two factors in order to avoid financial problems in the future.
If you choose an excessive maturity, you also run the risk of having to continue repaying your loan when the destination of your investment has become obsolete or worn out. It is therefore important to choose the term of a payday loan based on the destination and purpose of your investment.
Simulation of a payday loan
To get an idea of the financial consequences of a payday loan, more and more lenders offer you the opportunity to do an online simulation. This method allows you to accurately simulate your financial situation after taking out a loan from this lender.
In fact, an online simulation tool is a small software on the lender’s website that allows you to make a simulation of the financial consequences of your payday loan. By providing all the necessary personal and financial data, the tool will automatically show you the most advantageous options. Before submitting your final application, you can of course do several simulations (of several types of loan and several lenders) in order to find the most advantageous payday loan that best suits your personal situation.
The data necessary to make a simulation, are the following ones:
- your personal data,
- data about your income,
- an overview of your fixed expenses,
- the personal and financial data of a potential partner.
Ask for a quote
By requesting several quotes (preferably from several lenders), you can quickly have a clear idea of the conditions and rates applied. That is, by comparing quotes, you can quickly find the most advantageous payday loan that best suits your personal situation. Today, it is easy enough to ask for a quote.
Most lenders offer potential customers the opportunity to request quotes online. Often, you can do a simulation of your loan before asking for the quote. In this case, the estimate will only be the official confirmation of the simulation.
As is the case for simulation, some personal and financial data must be entered to request a quote. Then the lender will send you a quote, which you can accept or not. Remember that a quote is only valid for a certain period. After the expiry of the deadline, you will need to request a new quote.
Apply for a payday loan
If you have found an advantageous payday loan from a reliable lender, it is time to apply for this loan. Like simulations and quote requests, it’s easy enough to apply for a loan. More and more lenders are offering the facility to settle this application online.
When applying for a payday loan, certain personal and financial data relating to your situation and that of a potential partner must be provided. In this case, you will also need to provide some proof, such as:
- a piece of identification or a passport to verify your identity,
- pay slips or other income certificates to demonstrate your financial ability to repay the loan,
- proof of certain fixed expenses, such as the obligation to pay alimony or repay debts.
On the basis of these data and the control with the CCP, will be able to verify if you have enough financial means to repay the debt due without problems. As a check with the CCP is often required, it may take a few weeks to process your request.
Repay a payday loan
Each loan will have to be repaid one day, including a payday loan. However, the lender will not only want to receive the loan amount, but also interest on the debt. These interests are considered as remuneration for lending money and having incurred some financial risk by granting the loan.
In most cases, you will repay each month a certain portion of the debt, plus interest. As the repayment of the payday loan progresses, the portion of the amortization will increase and the interest portion ( which is a percentage of the debt owed ) will decrease. This is because most payday loans are contracted at a fixed interest rate. In this case, the share of interest will not change according to interest rate fluctuations, which often makes it possible to calculate exactly the amount of monthly payments in advance and know when the entire debt will be repaid.
The consequences of a payday loan
A payday loan will allow you to:
- (temporarily) expand your financial flexibility,
- make a payment or finance a purchase,
- You contractually agree to honor your payment obligations for the duration of the contract.
So there are advantages and disadvantages associated with this way of borrowing money. A payday loan will allow you to finance certain things without having the necessary financial resources. However, this loan will require you for a certain period to limit your expenses each month in order to meet your repayment obligations. It may even be that you are a little short of money by repaying the monthly payments. In some cases, it will even be deprived of certain things (go on vacation, go out with friends,…) because of your debt. After all, you can not spend your money twice….
Another consequence of your payday loan is that your debt will be registered with the CCP. This registration may have consequences if you decide to take out another loan. In fact, excessive indebtedness not only poses financial risks for yourself, but also for the people or companies that loaned you money.
Inability to repay your payday loan
Most people are aware that a loan, including a payday loan, is not free. However, there are still many people who underestimate the financial impact of a loan and therefore may not be able to repay their debts and / or other payment obligations. At first, you will probably try to repay your loan by taking out a second loan. In order to honor other financial obligations, some payments may be deferred.
Once your financial situation has become unmanageable and you can not repay your loan, the lender will send you reminders and notices to induce you to honor your obligations. In general, some fees will be added to the debt due to this late payment.
If repayments are not taken back, the lender will send your file to the bailiff. It will also try to develop a repayment plan in consultation with you. However, the intervention of a bailiff will also entail costs, which will be added to the debt owed. If you still can not repay your (increased) debt, your income or property will be forfeited in order to repay (part of) the debt and pay the extra fees. In this case, your financial situation will have gone from bad to worse because of your payday loan.
Registration with the CCP
In our country, it is legally binding to report all loans and credits of € 1000 or more and / or three months or more to the CCP. It will record all loan and borrower data in a database, including late payments and default events.
Before granting a payday loan, each lender is obliged to check whether a borrower is registered with the CCP and what its credit history is. In the case of over-indebtedness, or even late payment or default, the financial risk for the lender is greater. In these cases, your chances of getting a loan (personal) will be nihil, because a lender will always ask that the loaned amount be repaid without problems. Registration with the CCP also serves as a protective measure for the borrower. In the case of excessive debt, it will simply be impossible to borrow more money, because such a decision would not only be reckless, but it would cause more financial trouble.