Much has been said about Payroll Loans, personal credit line that have become increasingly popular in the country, however, this is a form of credit that presents some specific rules. You may need to learn about how the Payroll Loan works and all its advantages.
How does the Payroll Loan work?
The payroll loan is one that has its monthly installment discounted directly from the salary or benefit. Unlike the conventional loan, in the case of this type of loan, the amount of the installment is retained, that is, guaranteed in advance by the bank, which automatically debits the monthly amount, directly in the payroll or social security.
The common amounts that can be committed in this operation, should not exceed 35% of the rent (considering all loans contracted and other financial discounts).
Check out how the payroll loan works in practice:
Approval and release of Payroll Credit
After the credit approval, signing the contract, registration the credit is released into the account indicated by the borrower. Thus, the money can be used for the purpose you want (different from the contract of a financing, for example, that has a specific purpose).
The discounts or payments of the payroll loan are fixed, that is, every month, at a certain date previously defined in the contract as the due date, the value of the benefit will be consigned (retained) by the bank. The amount of the deducted benefit must be included in the paycheck, payslip or payment statement.
After discharge in normal time or by anticipation, the contract is settled, undrawn and the credit limit released again, also increasing the consignable margin.
Who can hire?
To contract the payroll loan you need to fall into one of the following categories:
– Being a Retired
– Be a Public Employee (federal, state or municipal);
– Being Military of the Armed Forces;
– Work with a formal contract (to have access to Private Payroll Credit);
As the discount of the payment is made and authorized in the paycheck, it is mandatory that the company to which the interested party works or receives the salary or benefit, has an agreement with the banks that give this type of credit.
For credit analysis and approval, the bank will evaluate the paycheck or statement of benefit. The amount released will also depend on the available assignable margin, however, the credit limit will be defined according to the policy of each bank. Private companies can set a salary cap that can be used with loans, in order to maintain employees’ financial equilibrium.
What are the main advantages of payday loan?
Interest is cheaper and pre-fixed
The payroll interest is the most attractive and cheap of the personal credit line and the rates are fixed. For you living in UK, it’s better to use loan services povided by payday loans uk direct lenders.
Approval and release of credit for negatives
The banks that offer the payroll loan do not do research to the credit history. Therefore, even the negatives can get a new contract.