If there is a gaping void in your wallet, it is helpful to be able to borrow a few euros from friends and or family without having to go to a bank, justifying why you are in a financial bottleneck and what you are doing it for Needs money. For about nine years now, people in Austria have also had the opportunity to borrow money from strangers instead of friends, family or the bank.
This relatively new way to borrow money first came in 2005 in the UK, the following year in the US and in 2007 in Germany. Today there are no Austrian platforms, but all Austrians can also use the services of the German side and thus also take out a private loan, but also offer it.
What is a payday loan and how does it work?
As already mentioned, a payday loan is a loan from a person who is not necessarily known to the borrower on consumer-friendly and attractive terms. You can accept one if it is uncomfortable to ask friends or family for money, which is legally a payday loan, or if the bank does not grant a loan, for example for the purchase of a house.
Furthermore, a payday loan is often there to enable a small purchase in the form of a micro loan, but not necessarily a business background. Since 2014, payday loans have been a generally accepted form of lending. However, it is highly recommended that you check whether the loan provider is a reputable person, compare the various offers, and review the contract carefully before you sign it.
How do I get a payday loan?
All those who have decided to inquire or accept a payday loan visit one of the platforms seen for this. Once there, log in and submit an application. Everything else, such as further procedures and the like, you will usually learn on the respective platform. However, it should not be forgotten that even with a payday loan, a detailed credit check is essential.
This is to avoid that people who have no options at all or for whom it is foreseeable that they will not be able to pay the loan plus interest back will not get a loan at all. Furthermore, this is also a protection of private individuals who want to lend money to other private individuals.
Are there advantages or disadvantages with payday loans?
Advantages for the borrower with a payday loan are, for example, that one often gets favorable interest rates as such and therefore does not have to pay as much as with an equivalent loan from the bank. Furthermore, it is also possible to borrow small sums if it is only about bridging a short financial drought or buying an inexpensive product. Freelancers and the self-employed in particular have a real chance of getting a loan, which is often made more difficult because banks often do not grant them a loan or only hesitantly.
This is because the income of a self-employed person is difficult to predict and predict from many factors, such as the season. Due to the detailed examination of all these things, the reason for the possibly higher effective interest rate for payday loans is also called “peer-to-peer loans”.
It should be noted that, for example, the operator of the platform, on which private loans are offered and you may find something, also wants to generate income. For this purpose, costs are generated for both those who are looking for the loan and those who are providing money in return for interest. Furthermore, the banks that act as trustees of your money often collect a certain percentage. Additional services are often also subject to a fee. Calculate all of this in your bill before offering or taking out a loan.