If your spending has gotten out of hand, unforeseen issues have arisen and the month is hard to close, one solution is to borrow money. However, before hiring the first option that comes your way, it is good to check your financial situation, do the math and, especially, perform a personal payday loan simulation.
Interest on this type of credit is lower than overdraft or credit card and gives you more time to pay, which may be essential for you to rebalance your accounts. In this post, we will explain everything you need to know about it.
Why do a personal payday loan simulation?
As bad as your financial situation is, you need to remain calm at this difficult time, consider the options available in the market and have clear goals to know what to do with the borrowed money.
Two of the main mistakes made when applying for a loan are not consulting the interest of different banks and not considering the impact of the installment on your budget.
Simulation helps solve these problems: It provides information about the rates charged – which can vary considerably from bank to bank – and how much you will have to pay each month. Ideally, the benefit does not compromise more than 20% of your income.
Also evaluate the Total Effective Cost (TOP) , which includes, in addition to interest, taxes, administrative fees and insurance involved in the financial transaction.
In addition to simulating and comparing options, it is also important to know where your money is going and to review your spending to accommodate this new expense. A personal finance app can help with this task.
How to make a simulation in your bank?
The bank in which you have your checking account allows you to do a simulation. Go to an ATM or go to internet banking and look for the option “Loans” or “Credit.”
There should be a link to the credit simulation service. Enter the required amount and the desired term, and then check the payment terms, the interest rate, and the amount of the installments.
How to compare banking and financial options?
Applying for a loan from the bank you have an account with can be quick and practical, but it is unlikely to be the cheapest option on the market. Big banks usually practice very high rates. To compare alternatives, it is best to check the different rates and costs charged by banks, lenders and lending platforms .
A good solution to do this is to use the Lite payment application . With it, you can simulate at once how much you would pay for the loan at each institution, according to how much you need and the timeframe you want to repay.
You now know the importance of doing a personal payday loan simulation before resorting to this form of credit. Analyze your situation and available options and use this solution with awareness.