Personal loan: how to choose the best type for you
Any individual is liable to be caught off guard by some financial unforeseen event. An expense that you did not count may appear suddenly, and the only alternative in sight is to take out a personal loan. Do not panic; in such cases, it is very important to analyze what solutions are available and not act on impulse.
Especially because there are plenty of loan alternatives, and with good research it is possible to find what fits your situation. In this text, we have separated some of the types of loans existing on the market. Check-out!
Payroll loans are very popular, and most experts generally recommend this. First, because their interest is very low compared to other loans; and second, because your installments are charged directly to the payroll. With this, financial institutions are guaranteed payment and, consequently, provide lower rates.
However, not all people are entitled to access this type of concession. Only pensioners, retirees and employees of large companies, who have agreements with banks, are entitled to this credit.
Another very popular way of obtaining credit is through refinancing. Generally, the most common are real estate and vehicles, also known as refinancing or secured loans.
These assets are a guarantee for the bank to provide the loan, even at much lower interest rates. What happens is that, if you do not pay the installments, the institution has the right to take it.
The main disadvantage of this line is that there is a risk that you will lose the asset if you do not pay the installments, but it is the best loan for the consumer to acquire what he needs, since the rates are very attractive and the terms are very flexible and, in some cases reach 20 years.
This category is easily accessible, as it can be purchased through an ATM or even through mobile devices. However, this convenience makes the modality one of the most expensive compared to financing or payroll.
It is known as a pre-approved personal loan, as it is possible to apply for this type of credit without speaking directly to the manager. Therefore, it is not necessary to explain the reason for the application, as with other loans.
In relation to the high interest rate, it is possible to negotiate with the bank to decrease it. However, the credit will no longer be pre-approved.
It is ideal for those individuals who do not have access to the payroll; however, it should be used sparingly, as the risk of incurring a large debt is enormous. Payments can be paid by a boleto or by direct discount on the account.
Related to the credit card, this type of alternative is very practical, but it can generate a huge headache. When the consumer pays a lower amount on the card bill, the rest is automatically paid by the bank, which makes a kind of “loan”.
Thus, this amount paid by the institution is charged in the next invoices with interest, usually very high and abusive. The main advantage of this system is its flexibility, which helps the user to get rid of credit protection services. However, despite this, this loan is a trap, precisely because of its high interest rates, reaching almost 16% per month.
Furthermore, it is important to know that, since April this year, the rules for this credit have changed. Now, the credit card can only be used for 30 days; if this limit is exceeded, banks must transfer the revolving credit to installment credit, which has much lower rates.
Revolving credit should only be used if you are sure that you will be able to pay off the debt on the next invoice.
If you need a loan, we can assist you with your needs.