Payday loans don’t necessarily have to be dangerous!

Have you come in the unfortunate situation that you suddenly lose a little money on your pocket and is the savings account empty when you check online banking? Then you may have to consider one of the popular payday loans. This type of loan differs from the classic consumer loans, credit cards and cash credits that you may be used to today. These loans are typically smaller – from 1000-5000 kroner. It is supposed to be used as a kind of “buffer” if you do not have enough money to pay their expenses late in the month. Therefore, they often also have a short maturity, for example, a few weeks. What is important to examine is what it costs to repay the loan – overall. Here it can be a bit misleading, for example, several thousand percents. YEAR means Annual Cost in Percentage. And since these loans typically have a relatively high interest rate, the annual cost will, of course, be very high. But what is worth mentioning is that you do not pay interest for a whole year. Typically 14 days, or maybe a month.

However, it is of course always a good idea to examine what kind of consumer loan best suits your particular situation, as it can vary a lot from person to person. And there are a lot of different kinds of consumer loans that you can investigate. There are both the larger loans with a lower interest rate, and then there are the very small loans, which on the other hand often have a low-interest rate – and in some cases no interest at all. Here most often it is an intro offer that you typically only get the first time. But in other cases, there may be other types of rewards that you can benefit from. For example, there are many loan providers that offer one payment-free month a year. The most important thing, however, is to make sure that the place you borrow money has a good reputation.

And if you’ve been just a little awake in the hours, it’s no secret that these kinds of loans are often criticized in the media. What is important to keep in mind is that the media’s task is to obtain audience ratings. And, unfortunately, there are now far more audiences in showing people who have problems with the economy than ordinary Danes. It is not fun that it is called the “lucus trap” and not “healthy private economy”. First, it is already in the name. The name suggests that you have come into financial trouble because of consumer loans, to buy things you don’t need. Clean and bright abundance. Here at the editors, it is important for us to establish that loans are and become a natural part of ordinary people’s everyday life. And we do not quite think it is fair to hit so hard on consumer loans. Especially not in Denmark, where the Danish consumers are so well protected by the world’s laws that it is almost impossible to cheat for the companies that issue the loans.

It is of course perfectly fine that you make TV programs, and we must also admit that we have seen a few individual sections every now and then, but the problem arises when there is no nuance. It is almost as if it is always the consumer loans’ fault that the contributors have ended up in an economically hopeless and unmanageable situation – despite the fact that thousands of Danes live in harmony with consumer loans. Of course, it is clear that it can be silly to record a mini loan to buy a new bag, electronics or other things that are not strictly necessary, as there will be costs in the form of foundation fees, payment fees and interest costs. Therefore, it is important to be aware that borrowing money costs money. If one has this point of departure, one is always sure that one will not be surprised to pay interest and fees, and secondly, you may also be more inclined to reconsider whether it is really necessary to take out the loan. to start with, or whether it might be a better solution to wait a few months while saving up to what you have now chosen instead.

As long as you are aware that it costs money to borrow money, Mini loans need not necessarily destroy your finances. As long as you have reason with you and use your head, consumer loans do not have to ruin you. On the contrary, it can actually help you. There are many who are stressed over their finances. And here it can sometimes be an opportunity to borrow a consumer loan. For example, if you lack new furniture, the car is going to a workshop, and your niece will soon have to be confirmed, all these things together can give you a very stressful life. Instead of stressing over these things, it can make sense to take up a consumer loan, in order to get control of all the “hanging parts” that one might not want to do easily by saving up. In this way, one can say that a consumer loan can mean that one gets the opportunity to get a lot of things in order. It can also sometimes give more air in the economy to take up a consumer loan, as it thereby gets the opportunity to get more loans together in one. This often results in a larger disposable amount and can also give you some better interest rates so it doesn’t have to be as expensive for you as a consumer to borrow. However, always remember to check if it is worth taking out the loans in this way, as the formation costs of taking out the loan can quickly offset the benefits. In addition, there are also some who can lose motivation, as one can no longer “knock” one loan off, at a time. Therefore, for some it may be more confusing, suddenly having to deal with a large loan that has more years of maturity than more small ones – despite the fact that the total amount may be the same.

Why is life insurance better than payment protection insurance?

Image result for life insuranceAlthough the new Mortgage Law will prohibit the obligation to hire insurance to grant a mortgage, this will not mean that financial products do not continue to sell insurance such as payment protection.

On the one hand, what the new legislation determines is that the client always be shown a mortgage offer without any product linked to one or several offers that, if they can contain different conditions, but with product linkage. Banks can thus offer proposals with discounts, usually discounts on the interest rate, if they hire these products.

The other way in which payment protection insurance grows is in its growth in the personal loans segment, especially in the highest amounts.

In all cases, its commercialization is based on selling the benefits of its coverage: the capital that remains pending from the loan in the event of death, temporary incapacity for work or unemployment. But all are limited and have several points not so positive that you have to analyze.

Beware of single premium insurance

The first point is related to how loans are amortized. The most common in Spain is that they are made by the so-called French method which implies that equal installments are paid throughout the life of the loan unless there are changes in the interest rate. This form of amortization implies that at the beginning of the loan is when more interest is paid and, therefore, less capital is amortized and at the end of the loan is when the capital is reduced more quickly.

In practice this assumes that these loans are more interesting when the loan operation starts and loses this interest when few years remain. To avoid this drop in hiring, it is a practice of some financial entities to market it as a single premium insurance; that is, the entire insurance is paid when you sign the contract for your mortgage. This form can involve certain limitations and problems. The first, the high amount, especially in mortgage operations which leads to even financing through the loan raising its amount. The second, if you anticipate the cancellation of the loan, you have the right to claim the proportional part of the premium.


Very limited protection  

With all this it is clear that the insurance protection is limited in quantity despite its cost that is usually high. It is for the main coverage, the death coverage, but also for the rest. For illness, you have to read the conditions very well since not all the illnesses that can take you to the medical leave can be contemplated in your coverage. Likewise, unemployment coverage is limited in time.

Faced with this, life insurance covers all contingencies in a broad way, you can comfortably pay it periodically and update it to offer complete security for those you love most.

Tricks to stop wasting money

While it is true that we are increasingly aware of the issue of savings, we continue to have spending habits that we can improve to avoid wasting money .

We do not like to deprive ourselves of anything, even though with that we get to have a mattress of money that makes us be able to face any unforeseen event in the future.

When we talk about wasting money, we refer to those compulsive purchases that we make and that in most cases could be avoided. Sometimes, when we do one of these purchases, we regret it, but there is not always a way back!

How to avoid wasting money and saving

How not to waste money How easily the money goes! We must assume it, in many cases we fall into the hands of consumerism. The publicity and the impulses can with us and we end up buying things that we do not need and that in some cases we do not even really like. Why do we waste money this way with what it costs to earn it?

We are going to give you a few tips so that wasting money is not part of your day to day and you can save a good amount of money at the end of the month.

  • Knowing how to differentiate between the necessary and the superfluous. Separating the luxuries of what is really necessary is a great first step to be able to stop spending money in an uncontrolled way. A quirk from time to time does not have to hurt anyone , but when it becomes a habit, you have to put a brake on it.
  • That the emotional ups and downs can not with you. When we are sad we usually give ourselves a whim that makes us feel a little better at the moment. You have to think that this small impulse, if it is repeated with assiduity, can become a big hole in our monthly economy.
  • Make good use of energy in our home. We have to use energy with a head. That means, for example, that the lights have to be turned off when you are not in a room, hire a time-zone rate, do not overuse the air conditioning or heating … There are many ways to save at home, all help to avoid spend too much.
  • The restaurants, for special occasions. We tend to go for the easy, to go to a restaurant rather than to prepare something at home and grab it in a tupper at work. Making an approximate calculation of what you spend on eating out each month is simple. Imagine that you go to the typical restaurant menu at about 11 euros 3 times a week. What looks like a cheap menu ends up becoming more than 130 euros per month of spending.
  • Invite, but not in excess. We all want to be splendid with our friends and family, but you have to know where the limit is. Inviting too much will make you stop controlling expenses and find yourself with a small big hole in your pocket.
  • Why buy premium brands? Sign up for white brands! Most of the time these have a very good quality and a price much lower than premium brands. Little by little you will be making a piggy bank.
  • Do not pay for services that are not used. A reality that we seem to be accustomed to is paying for services such as television and music, etc. That we do not take full advantage or that, directly, we do not use. This entails a constant loss of money.

Use common sense to avoid wasting money

Tricks to save money The most important thing when it comes to being able to save money and stop spending it on superfluous things is to use your head. Knowing how much money comes in and how much goes out is ideal when it comes to being able to keep a specific amount at the end of the month.

A good idea to know if you are spending more than the account, write how much money you enter and how much money you spend on necessary things. If at the end of the month the numbers do not add up, it’s something you’re doing wrong and you should start investigating what happens.

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September 25, 2018 Share this article: