When the bills get tight, there’s no way: you need credit. It may not even be due to bills, but to make a dream come true, to make an investment, to settle an unforeseen event or even to set up an emergency reserve. At such times, getting a loan can be the way out.
What we must not forget is that first of all, a loan is a debt. Therefore, you need to be very careful in the world, making calculations at the tip of the pencil to choose the option that has the lowest interest and the best form of payment.
Thinking precisely to help in this decision, we list here the main types of loans available in the market out there. Let’s talk about the key features as well as the advantages and risks of each option. Check-out!
This is the most common type of loan, one in which you come in direct contact with the bank. Once the financial institution has reviewed your documentation and set out as much as you can borrow, the money will be in your hands. Once your credit is approved, the money is usually released within 24 hours. In this case, there is no restriction regarding the destination of the value.
Can anyone make a personal loan?
In most banks, personal credit is released to account holders – that is: you need a checking account and other bank products. Remember that some institutions require some time from home to release the loan. Thus, if you go to a bank with no account looking for credit, you may have some difficulty in clearing.
What are the biggest advantages and disadvantages here?
The biggest advantages of this type of credit are the speed of release and freedom in the destination of money. As a major disadvantage, however, you increase the value of interest. For this very reason, the personal loan should only be used in emergencies and preferably if you can repay it within a few months. Since the calculation is made from compound interest, the longer the repayment term, the higher the total.
Payroll-deductible loans are very similar to personal loans, as they make the money available to the client’s account, so they can use it as they see fit. This modality is also known as payroll-deductible loan, as the monthly payments are debited directly to the borrower’s paycheck.
What does payroll credit bring about positive and negative?
As in this case the payment guarantee is higher, the interest rates are lower than the personal credit. Another good side is that you do not have to worry about paying the installment, which is already automatically deducted from the sheet. In the event of an emergency, however, you cannot choose to pay the installment after the due date. In addition, payroll-deductible credit is only available to a restricted audience:
- retirees and pensioners;
- federal civil servants;
- employees of companies with an agreement with the bank.
We can say that the overdraft is extra money that is available in the checking account pre-approved. So: If you have 500 dollars in your account and your overdraft limit is one thousand, the available balance will be 1,500 dollars!
How exactly does this work?
You can use this amount as you like and interest will be charged monthly, on a specific date – usually at the end or beginning of the month. The Tax on Financial Operations (IOF) is also paid. Using this limit, whenever any amount is deposited in the account, the bank automatically considers it as payment of the overdraft balance. If you cash out again, there is a new interest charge and of course tax.
Is it worth using this limit?
As is to be expected, so easily charges at a high price, which, in this case, comes in the form of exorbitant interest rates – among the most expensive in the market, reaching levels above 400% per year! Therefore, making withdrawals from this limit may end up generating a hard debt to pay off and consequently a huge headache.
So how to use overdraft?
The smartest way to use overdraft is to reserve it for emergencies, preferably just overnight. Assuming your salary goes into your account on the 5th and you have to check it clear the 4th, the credit can cover the payment, preventing the return of the check. Thus, one-day interest and tax will be charged in proportion to the amount. But don’t take this money as a loan, okay?
Card rotary limit
Do you know those cash withdrawals you can make in credit card? For this is the revolving limit, which, like overdraft, also attracts availability. The difference here is that you can repay the debt. But again, the problem is the interest rate, which is very high and can reach more than 800% per year. Surreal, don’t you think?
It is noteworthy that if you pay the minimum amount, the outstanding balance is also considered revolving credit, with identical interest charges. The cause of this snowball effect is that so many people have already suffered from credit card debt. And that is exactly why the rules for the use of the minimum payment have been changed by the FullSavers Bank (BACEN).
What was changed by the rules?
Until very recently, it was possible to pay the minimum amount for several and several months, which made the debt simply gigantic. With the changes imposed by the FullSavers Bank, this feature can only be used today in a month. On the next invoice, the entire amount due must be paid. Otherwise, you are either in default or have to try to install with the operator.
In this type of loan, the customer uses a repaid property (in his name) as security of payment. It is as if he sells his house to himself. Because there is a real guarantee (a good), interest is cheaper. Thus, the difference between the amount taken and the amount paid is smaller, not to mention that it is possible to opt for more elastic payment terms – up to 10, 15 or 20 years.
What are the disadvantages of refinancing?
The major disadvantage of this modality is that, like real estate financing, refinancing is also very bureaucratic, and has other aggregate costs, such as property survey. Remembering that there is still a risk that the customer will lose his equity to the bank if he can not repay his debt.
There is also the Vehicle refinancing, which works similarly but has slightly higher interest rates and applies much shorter repayment terms.
Financial institutions also offer their clients the possibility of anticipating part of some receipts – such as income tax or the 13th salary. To do so, the account holder must indicate the bank in his statement or receive his salary into account, respectively. And because the payment guarantee in this case is higher, the interest rates tend to be lower than the personal credit.
However, planning is necessary, as in the future you will have to give up refund money or 13th money – and we know that this extra is always a big help to the family budget.
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