Which is better: Financing or Payroll Loan? The ideal is to buy in cash, however, we know that, unfortunately, this is not the reality of a large part of the population. So how to conquer your dreams?
What this article covers:
Financing or Payroll Loan
There are several lines of credit available from banks and finance companies. Those with the best rates are: payroll loans and real estate financing.
In both modes, you will be borrowing money from a financial institution to pay later with a certain amount of installments with increased interest.
However, before taking on a debt, one of the basic rules is to study the alternatives available in the best banks and finance companies, as well as to evaluate the conditions such as interest rate, term and value of the installments.
The best option is the one that offers the lowest rates and doesn’t break your monthly budget.
However, pay close attention to changes in the economy that may modify offers and hiring conditions.
An example of this is the recent increase in the Selic rate, which consequently increased the interest charged on loans and financing.
Study the best credit alternative and what you need to consider when choosing between a payroll loan and real estate financing to achieve your dreams.
What is financing?
Financing is a financial negotiation to receive credit where an institution makes resources available to another party to achieve a certain objective.
That is, to make a funding is worth itit is necessary to declare the destination of the money, such as acquiring a property, a lot, a new car or renovating the house.
It is necessary that the money has a certain destination and, in case of approval of the financing, it will be sent directly to that objective.
This modality is used for high-value purposes, such as buying a property.
The guarantee is related to the good to be purchased (fiduciary alienation).
In this circumstance, in the event of non-compliance with the agreed payment, the financial institution may take possession of the asset.
What is a payroll loan?
The payroll loan, also called payroll loan, is a type of personal credit, where the installments are deducted from the payslip, paycheck or INSS benefit.
It is more common for pensioners, retirees, civil servants, who, with a proven source of income, can use it as a direct source of payment.
As these installments are deducted from retirement or salary, institutions are sure that they will receive payments and offer lower interest rates.
The difference between payroll loan and financing
The main difference between these two modalities is that with the payroll loan, the customer can take the requested amount and decide what to do with the money.
It is worth remembering that both operations involve borrowed money, and for this reason, the financial institutions that provide the credit add interest rates and other operating costs to the value, which will be paid during the term of the contract.
As previously mentioned, in financing, it is necessary to inform what the money will be used for.
On the other hand, in the payroll loan, it is not necessary and the money can be used for whatever the customer wants.
Financing has the advantage of being offered to anyone, as long as they don’t have a dirty name, have a good track record and prove income.
In contrast, the payroll loan is available only to some groups, also known as eligible categories.
Loan or financing, which one to choose?
When choosing between financing or a loan, the first step is to analyze which interest rate is being applied.
In many cases, the financing rate is much more affordable than the loan rate, preventing you from paying abusive interest.
It is also necessary to check the Total Effective Cost (CET), and analyze what is being charged in the contract.
By going through all these details with a fine-toothed comb, you can make a decision and choose which one is best for the purpose you want.
