If you have a permanent job and need to apply for a payday loan, going to the bank where your payroll is domiciled may be the most appropriate option.
What is a payroll loan
It is the type of loan that uses the monthly salary as a guarantee of payment. This means that you do not have to go to the bank to cancel your monthly payment: the money is automatically debited from your bank account at the time you receive your salary, before you can spend it. This means an important guarantee for the lender, so it will offer you better conditions.
That is, if you apply for a loan via payroll, it can be without guarantee or guarantee and in some cases you can apply even with financial credit institutions
Something important to remember is that these loans depend, above all, on how old you are at your workplace.
Some lenders request to have a minimum time of one year to apply for the loan; The more time you have in your job, the greater the amount you can request.
The same happens with the total salary you have: the more you earn, the more the amount of the loan will be approved.
Benefits of payroll loans
- No long credit history is needed:
It is a good option for those who want to start their credit history. For example, if you just left college and got your first job.
- Low interest rate:
With less risk of default, banks often offer lower interest rates compared to other types of loans.
- Insurance and other reduced costs:
There are some financial institutions that add an additional service to the loan, it can be life insurance or unemployment insurance. Having these services unified, they tend to be less expensive.
Another benefit is the flexibility you have with the payment periods, they can be weekly, biweekly or monthly.
In some cases you can directly request the loan from an ATM, but we recommend that you go personally with the lender (or at least check their website) so you can know all the details of the interest rates and additional terms.
Requirements for fixed payroll loans
- Fixed income:
The fundamental requirement is to have a permanent job that has a monthly salary. Sometimes pensioners or other people with fixed income can also apply to these loans.
Normally you will be asked for a minimum of 3 to 6 months, but if the amount is high, the time may increase to 1 year or more.
- Bank use:
The normal thing is that the loan you ask for in the same bank that you collect your salary. If your bank does not want to offer you a loan, you can ask your employer to change your institution. You cannot apply if your salary is paid in cash.
- Identity Document:
As with any loan, you need to prove your identity with your document.
- Credit History:
They may check your credit history, but if you have a permanent job, most lenders overlook the fact that you are on the Credit Bureau list.
The requirements for freelancers are usually a bit more demanding since they usually do not have a fixed salary but can vary month to month. For this reason the lenders ask for a longer period of seniority in the professional activity, possibly with a minimum of 2 years.
Recommendations and advice
Finally, we recommend that you do not request an amount greater than 30% of your current salary, since this would represent a very high cost to cover month by month.
We also advise you to only apply for the loan if you know with certainty that you will continue in the same job at least during the loan extension; This way you will avoid surprises for you and the lender.