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How do payroll loan interest rates work?

The interest rate is one of the aspects that deserves the most attention in any loan. Even in payroll loans, which have one of the lowest rates among personal loans , it is important to know how this works. Come on?

The interest

The interest

Interest is the bank’s way of making money, making the loan worthwhile. The value usually takes into consideration the risk factor in addition to the payment time. In the case of payroll-deductible loans, trading security is high because the payment is virtually guaranteed .

Fixed interest

Fixed interest

The interest rate of the payroll loan is fixed , ie it does not vary with time or inflation, and is agreed by both parties at the time the credit is settled. Therefore, this type of transaction avoids surprises. Also, it is good to know that usually the shorter the loan time, the lower the interest rates. It is always worth researching the best situation when applying for credit.

An example

Let’s look at an example to compare the importance of finding the lowest interest rate on a payroll loan.

An employee needs a USD 1,000 loan, and his company has an agreement with two banks. One offers a 2% rate and the other 1%. Both with payment of 1 year.

In the first case, the value of each installment is USD 94.56 per month, for a total payment of USD 1134, 72. In the second case, the value of each monthly installment is USD 88.85 and the Total spend was USD 1066.20. A difference of 68 dollars. Because of this, it is very important to always look for the lowest possible interest, because this variation is even more striking in larger amounts.

How to find the lowest interest?

How to find the lowest interest?

To find the lowest interest you can consult the average list established by the bank. It is also very helpful to have the help of a professional, so we can help.

Each bank has an independent rate , which varies according to various parameters. First, the type of covenant. A civil servant or INSS beneficiary has the slightest variations due to the greater security of his income. In the case of a formal worker, the variation may be greater. For example, let’s say a company has an agreement with a single bank. Because of this small monopoly, interest rates may be slightly higher. Therefore, it is always essential to make agreements with as many banks as possible , and to use reliable services to keep interest rates lower .

Payroll-deductible credit is a cheap loan modality , which can be very helpful in covering an emergency or stabilizing the financial life by paying off credit card and overdraft debts. It helps both businesses and employees find the best credit possible, cheaply and smoothly. Contact us.