We would think that a payday loan is not worth it because of its high interest rates, but it can still be more advantageous than loans.
The biggest benefit of a payday loan is that it does not require real estate collateral, is generally freely usable, and here the only security is our payment, possibly other loans and our past billing.
In the past, it was even offered at 30-40% interest rate (or cheaper on foreign currency basis), but from April 2012 such a loan can be granted at a maximum interest rate of 24% higher than the central bank base rate (currently 27.6%). There are also offers below 20% interest rate, but with a quick loan you can expect a higher APR. In case of loan redemption, debt settlement or online loan we can find offers with up to 13.47% APR.
It is good to know that in August 2015, the government and the banking sector agreed to convert the last foreign currency-denominated loans and loans in Hungary.
It’s time to convert forint
As of December 2015, financial institutions will be mailing their forint conversion offer to all their clients. If the client does not notify the lender within 30 days that he does not wish to use the forint conversion, the contract modification will take effect. That is, we can stay on a foreign exchange basis, but of course, knowing that this will give us some uncertainty due to exchange rate changes.
We can take out quite secure loans today. Why?
Banks now provide payday loans on a forint basis, and often have a fixed interest rate, so it does not change until the end of the term if the loan is contractually repaid – that is, it is much safer to borrow these versions than old loans.
Therefore, when choosing between loan options, give preference to those with a fixed interest rate, which means that even if the central bank raises interest rates, it will not jump. Neither central bank changes nor foreign exchange changes affect our repayment in this way.
For what, why not?
Before we jump into borrowing, let’s think about whether we really need the money we get. It is not worth adding to our Christmas gifts, our annual holiday, we should rather reschedule our income and save.
However, for example, replacing our more expensive loans (which can be a commodity loan, overdraft, or credit card debt) can earn you hundreds of thousands.