Personal Payday Credit and its Actual Cost

Today we are going to approach the personal payday loan and its actual cost through the APR (Annual Effective Annual Rate) in the Consumer Credit and thus build the bases for the availability of the file of comparison of Loans to the consumption that will allow a better comparison and analysis of proposals your personal payday credit.

As you know, the APR shows the actual cost of a consumer credit including in the calculation formula, the various credit variables, as well as the initial and credit charges and the respective proposed taxes and insurance and any associated products that generate a charge for the credit. bank account.

What is the APR for?

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The interpretation and analysis of the APR allows the bank client to compare proposals from different banks for the same purpose of financing and can clearly ascertain whether a proposal of credit with a lower interest rate than the other proposals is really the best proposal to be chosen by the bank client. Hence the importance of using simulators and credible and reliable support.

A clear example is the scenarios below, where a lower interest rate is not the best option on the part of the client

As it can verify that Bank A has a better interest rate, with a difference of 1.5% in relation to Bank B, we can easily conclude that Bank B’s proposal is that which presents an effective cost to the smaller customer, returning an APR of 12.25%, representing a difference of more than 0.5% in relation to Bank A.

With this framework it is clear that the initial charges and possible products offered by the bank to the customer, benefiting the latter from a lower rate does not mean that it is the best deal in terms of optimizing the cost of credit.

This conclusion was one of the priorities of Decree-Law 133/2009 that allowed the mandatory introduction of the Normalized Consumer Credit Information Sheet where the Total Amount Imputed to the Client should be included. In practical terms, this is the true amount of your credit when it ends, hence it is the best indicator of comparison of credits to consumers under the aforementioned Decree-Law.

APR Calculation Incorporates

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  • Amount;
  • Term;
  • Interest rate;
  • Initial and consequent charges;
  • Insurance;
  • Other products.

If you are looking for personal payday credit you should consider different alternatives. We always advise you to consult several banks and financial institutions and here your simulation of personal payday credit in order to find the best alternative for your specific case. Always think about whether you really need credit. If you need support in your analysis do not hesitate and get in touch with us. It may even happen that you are asking for credit to pay off other credits … but there are other solutions that are as good or better!