Payday loan price in Belgium: How much does a loan cost?
To finance a project that is important to you, you have decided to subscribe to a payday loan. However, this loan commits you to pay the monthly payments during a well-defined repayment period, according to the interest rate applied. To avoid a situation of over-indebtedness, you must therefore have a glimpse of what will cost you this loan, and see if the repayments will be borne by your family budget, respecting the threshold of debt imposed by law. Some tips to help you calculate the real cost of your payday loan.
Learn how to calculate the cost of a payday loan
The repayment term and the interest rate are the main criteria to take into account when calculating the cost of a payday loan. But you must also consider the amount of the loan and the periodicity of the capital. With this data, you can set up a repayment schedule, better known as the amortization schedule. Moreover, this document is sent to you with the loan offer by confirming to you the amount you will pay at each maturity, while specifying in detail the distribution of the repayment which includes the capital, the interest and the premium of insurance. You will also have an idea about the remaining capital due after each monthly payment.
Basically, the overall cost of the payday loan refers to the difference between the total monthly payments (including fixed costs) and the amount of the loan. After the calculation, the sum in euros you will get will represent all the expenses you will have to pay, as well as the interest applied throughout the life of this payday loan. To differentiate between two credit offers that extend over different periods, refer to the APR (Annual Percentage Rate) which covers all mandatory fees. In case you have the same APR, know that the total cost of credit will be higher for a long repayment period because you will have to pay less every month. If in doubt, do not hesitate to seek the help of a counselor to help you out with the methods of calculating the total cost of a payday loan.
An online comparator to know the total cost of the payday loan
Although sometimes the total cost of the payday loan is indicated in small letters on the contract, it should always appear on this document and you should pay attention. For your convenience, go to payday loan simulation sites online to get a clear idea of the true cost of your credit. To do this, visit the site and indicate the basic elements of your loan to obtain an overall cost in a few seconds.
However, vigilance is required, because not all elements of credit can always produce reliable results. So, to reassure you, limit yourself to the annual percentage rate, the only figure that will allow you to have reliable results, because it includes the fees, the expenses related to the guarantee and those of the insurance. Do not forget to take into account the duration of the payday loan, because the longer it will be, the higher the rates will be.
The amortization table to calculate the cost of the payday loan
Depending on your needs and your repayment possibilities, you have the choice between the fixed rate and the variable rate for your payday loan. These two types of rates can be advantageous depending on your financial situation, your credit rating and your degree of tolerance of interest rate fluctuations.
Thus, the fixed rate will be adapted if you want to make monthly payments at the same cost for a repayment term in the long term, like to know in advance the amount you will have to pay within your personal budget, prefer to apply a Low interest rate that will last as long as you have to pay back and you are apprehensive of interest rate increases in the bank credit market.
On the other hand, the variable rate will not allow you to reassure you with a stable rate during the repayment period, because a fluctuation is to be expected according to the evolution of the market. This type of payday loan is recommended if you intend to repay the whole over a short period, and this, benefiting from advantageous interest rates. Here, you will not be able to know the final cost of your loan, unless the rate is indexed and the depreciation schedule will be made based on a general change in interest rates.
To be able to calculate the overall cost of your payday loan, choose the fixed rate credit. Again, you have to rely on your depreciation schedule and check the details of the monthly payments. Indeed, the composition of the monthly payment is not always the same, because during the first few months, the share of interest will be greater than that of the repaid capital. At the last moments, you will find that the proportion will be reversed and you will only have to repay the capital of your payday loan. Remember to refer to it if you plan to prepay.
Before you sign your payday loan agreement, do not forget to make a calculation of your debt capacity and decide yourself knowing that your monthly budget allows you to pay the amount indicated on the schedule, and that, in you ensuring a decent standard of living. With these steps, you act as a responsible citizen and will better reassure the bank that will grant you your payday loan, this reliable source of funding that you can use freely, without having to provide supporting documents.