A borrower with a project can use the payday loan to finance it, but is this the right solution in the event of heavy monthly payments? Here is the answer.
Short-term project: financing by payday loan
The payday loan is a consumer credit intended to finance a rapid project, that is to say a project requiring a small amount to acquire a car, a commodity or to finance the studies of children.
This loan commits the borrower over a repayment period and the latter will have to pay a monthly payment to honor his debt. This type of credit is relatively common in the banking world and rates can range between 3.5% and 10% depending on the profiles of customers.
Simply, this solution is not recommended when the borrower has a debt limit limit, it is preferable in this case to consolidate credit.
From payday loan to credit repurchase
The very principle of repurchase of credit is to settle the credits in progress to start again on a new loan contract including the remaining capital due and proposing an extended repayment period. With this banking operation, the borrower manages to repay a lighter monthly payment, which allows him to rebalance his budget. Please note that the extension of the repayment period may lead to an increase in the total cost of the credit.
The repurchase of credit can include an amount (optional) dedicated to short-term financing, which makes it possible to cover the project of the borrower within a certain limit. Indeed, credit institutions impose standards and in particular ceilings on the amount granted to a new project. Otherwise, the feasibility of the project may be called into question.
Loan buyback or payday loan: the study
The best solution to assess the cost of the two operations is to carry out a credit buyback simulation. This simulation will allow an objective assessment of the situation before and after consolidation of the credits.
Thus, if the borrower has a payday loan offer, he can compare the addition of this monthly payment to the other existing monthly payments with the proposal to group his loans. The study offered is free and without obligation.