Do you have a project and are you looking for a solution to finance it? Perhaps you’ve already heard of the depreciable payday loan: here’s all you need to know about it.
What is meant by amortizable payday loan?
A repayable payday loan is a loan relatively close to consumer credit, allowing a borrower to enjoy a sum of money intended to finance a project. This loan is said to be “amortizable” in the sense that its repayment occurs in several monthly installments spread over time. Like any amortizable loan, the borrower repays each month a sum composed of a part of the capital and a part of the loan interest, itself calculated according to the capital remaining due.
Concretely, the borrower repays a fixed sum each month, but the proportion of the sums paid as capital and loan interest varies over time. Generally, the first monthly payments are dedicated primarily to the repayment of interest, while the trend reverses as we get closer to the last monthly payments.
What is the difference between a repayable payday loan and a loan in fine?
If the repayable loan is characterized by a combined repayment of the capital borrowed and the interest attached to it, certain credits propose a different functioning by which the borrower will initially repay only the interest (and insurance costs) before then to repay the capital: this is a fine credit. The repayment of capital under the credit in fine is made in one go, at the end of the repayment.
Unlike a payday loan that can be amortized, fine credit is therefore characterized by monthly payments of small amounts during the first repayments, but it involves having a large sum of money at the time of the repayment of the capital.
How to choose between repayable payday loan and loan in fine?
Choosing between repayable payday loan and fine loan really depends on the situation of the borrower. The depreciable payday loan is a classic solution for which there is no bad surprise since the terms are clearly established from the start. The borrower knows exactly what he is committing to and he repays monthly payments, the amount of which remains stable from start to finish.
The advantage of a loan in fine is that the monthly payments are relatively low at the start of the repayment period. In addition, highly taxed households have a fiscal interest in opting for this solution since they can deduct from their property income the amount of interest reimbursed each month. This solution is therefore ideal for people with high incomes, unlike the depreciable payday loan which is better suited to the general public.