For a few years, people had taken out less credit because of high interest rates. As interest rates have fallen year by year, the desire to borrow has increased, and people are becoming more bold in borrowing. Unfortunately, there are life situations that cannot wait for a solution and require urgent financial assistance. In such cases borrowing cannot be postponed. Earlier loans have higher interest rates than current loans, so it is worth reviewing them periodically. A loan redemption can be the solution to save money. A free-standing payday loan is the best option for a loan.
Redeeming a Payday loan: Why is it Worth It?
APR interest loan refinancing,
A few years ago, the APR on a payday loan was around 20%. Nowadays, for standard requirements, the APR of unsecured payday loans ranges from 10% to 20% and the interest rate from 9.5% to 18%. With discounts and higher income, the APR can be reduced by up to 8-12%. One of the reasons for the popularity of a payday loan is the low interest rate and the other reason for its free use. In addition to these, there are a number of benefits, including the fact that applying is very simple, and you can get the requested amount in just a few days.
You may also need another loan in addition to the payday loan you have already taken out. The solution could be a loan redemption. In practice, this can be done by borrowing a larger amount of credit to cover the outstanding loan debt and sufficient for the new loan purpose. Let’s look at an example! If you borrowed 500 thousand forints a few years ago with unfavorable interest and now need another 1 million forints for other reasons, then it is worth taking the current interest of 1.5 million forints, which will replace your old high-interest loan and fulfill your current goal. If you take advantage of this opportunity, you just have to pay attention to repaying a single loan at a better interest rate.
It is worth taking advantage of the credit swap to reduce the amount of money the bank has to repay. Of course, before you decide, look carefully at your finances to avoid getting into debt. Make sure you can pay off your increased loan repayments, and make an accurate budget before you start your loan redemption.
Costs of redeeming a loan
There may be costs involved in redeeming a loan, but this amount is dwarfed by what you can gain from it. It’s a good idea to take out a loan at a cost that is higher than the cost of redeeming your loan, so you can repay it in installments. Prepayment fees may also vary for different loans. The prepayment fee for a payday loan may be up to 1%, if it is more than one year past due. If you have less than one year to pay off the term, the maximum prepayment fee is 0.5%.
Conditions for redeeming a loan
As with all borrowing, the requirements of the bank must be met in case of redemption. One of the basic criteria is that the debtor cannot be a member of the KHR register and must comply with all points of the debt brake regulation. Since a payday loan is income-based, no other cover is required to take out a loan, your credit institution will carefully consider what your verifiable income is. For every financial institution, the higher your income, the better your credit.