In 2019, the number of borrowers of microfinance organizations (MFOs) has significantly increased. The growth in the number of borrowers shows that payday loans are still in demand among consumers. We tell you how to approach payday loans correctly.
5 tips to use your payday loan responsibly
Match your desires with your capabilities
This applies not only to payday loans but in general to any financial product. In general, it is recommended to take into account a very simple formula and proceed from the rule that all monthly payments for all existing loan obligations should not exceed 30-35% of monthly income. You should not apply for borrowed funds if you are not sure that you can comply with the terms of the agreement.
Correctly understand the nature of payday loans
The specificity of a payday loan is that it does not duplicate a bank loan: shorter loan terms, smaller amounts, availability to consumers who do not have a credit history, or it is bad. And most importantly, the payday loan is as an “ambulance” tool. That is, this is “quick” money for solving urgent issues of borrowers.
Carefully consider the selection of a lender
It is necessary to check whether the company is legal. This is necessary in order to make sure that it is not an illegal creditor, mimicking under a legal one.
You access the state register using the Internet.
Study the loan agreement well
When concluding an agreement, you should carefully read the document and study the conditions for issuing money and repaying debt. The agreement must contain all the necessary information about the lender, data on the full cost of the loan. The contract must reflect the limit for the overpayment.
Loan insurance is an additional service. Even if it is included in the contract, the borrower has the right to refuse it within five working days from the date of signing the document. You should remember that the lender is not entitled to issue loans in foreign currency, unilaterally change the terms and rates on the loan, fine you if you want to repay the debt ahead of schedule.
Don’t hide your debt service problems
It is strongly not recommended to use the services of so-called “debt dealers”. With such interaction, the client only loses money, receiving nothing in return, the level of such pseudo-lawyers is not high.
If the borrower cannot make the loan payment on time (unforeseen life situation, delayed salary), he or she should not wait until late fees begin to accrue. It is better to inform the lender and request an installment plan or restructuring.