With the ongoing interest rate cuts and promotions by banks, one might think that payday loans have a season, everyone is looking for it, but the reality is more subtle. In fact, a payday loan is much more expensive than a home loan, but often it’s the best value, and we’ll show you why.
The biggest benefit of a payday loan is that you do not need real estate collateral, you can freely use the loan (in most cases) and here the only security is our payment, possibly other loans and our past accounts. In the past it was offered at 30-40% interest rate (or cheaper on foreign currency basis), but since April 2012 the law has been tightened here, with a maximum interest rate of 24% higher than the central bank base rate (currently 27.6%). Banks now offer payday loans on a forint basis (the last foreign currency facility is not available for a year and a half) and the interest rate is often fixed, so it cannot change until the end of the term if the loan is contractually repaid – much safer than old loans.
Many people have the benefit of being able to arrange a loan in as little as 1-2 days, especially at our own bank, where an agent can usually tell you – based on our account management history – how much credit we can get. It can be done quickly with other banks, but here you may need bank statements and employer proofs. Unlike home loans, payday loans can be claimed from as little as $ 100,000 to as much as $ 6 million, but most people usually take less than $ 1 million for a 5-year term (virtually no maturity over 7 years). Minimum wage is absolutely necessary for applying for a loan, it is important that you arrive at your bank account, but if you want $ 500,000 you may need a minimum income of $ 120-130,000 or a partner.
Anything can be spent
Most payday loans are really for free use, so you don’t have to prove what the money went to with bills. However, according to MNB statistics, APRs have fallen to a minimum from 28.93% to 26.56% in recent years (quasi-all banks are providing loans at maximum charge). On the other hand, we can see on the chart from our payday loan calculator that there is a lot of competition between banks, and you can find several offers at 20% interest.
The differences can be significant here too – with the BIC payday loan (Debt Class B), we repay $ 29,177 in installments and $ 1,747,037, with a APR of 27.57%, and Raisin’s payday loan (A1 we pay $ 25,366 per month and have to pay back more than $ 200,000 less (for a loan of 1 million and a maturity of 5 years). Most banks provide payday loans mainly to their own customers, but Raisin and MitiBank, for example, prefer to lend to non-own customers.
You can even buy a loan
More and more banks are entering the payday loans market (eg FHB, Mehubank) and there are loans that can be taken out specifically for redemption. Typically, overdrafts, loans, or credit card stays are worth combining and replacing with a payday loan, which can save hundreds of thousands, too, with credit cards of over 40% APR. MitiBank’s construction is one of the best, with MitiBank Debt Management payday loan starting at 18.99% and starting costs low (HUF 20,000 at HUF 1 million). The FHB ExtraA 2 Debt Settlement Loan is also well below the others – we’re already getting 17% interest, though the initial cost is $ 40,000 for a $ 1 million loan. Both loans, and by the way, have the specificity of a payday loan that is very low in initial costs and often has to be repaid (deducted from the loan amount). OneLoan and Mehubank also have mortgages.
Already for home renovation, car purchase
Banks have realized that we are reluctant to mortgage our property for a couple of hundred thousand or 1-2 million forints, so if we spend the money for specific purposes, we can get discounts (a bit like getting a home loan cheaper than renovating the same freelance loan).
UniCrededit came up with a Home Renovation Loan a few months ago for renovation, remodeling, expansion and all kinds of house related work. We need a simplified budget, and the bank can verify that we actually spent the money we announced. The disadvantage is the 12-month interest period, which means that the interest rate can change from year to year, and if you do not transfer your income to the bank and buy with your credit card, you can pay us up to $ 30,000 for the initial cost.
We can also apply for the SMN Bank Home Builder payday loan, but here we have to invoice the material and labor costs of the interior renovation or exterior building renovation work for the discounted rate.
Be sure to find out before applying, as you can save hundreds of thousands of dollars on a good choice. In addition to the initial costs and interest, pay special attention to the interest period, as in the event of a central bank interest rate increase, it is better to have a fixed rate loan until the end of the term. Currently, you can select from 168 payday loans from 23 banks in our payday loan calculator.