Thanks to the new ceiling on consumer credit, the maximum amount that can be borrowed for a payday loan is now greater than at the time: good news for households with important purchases to make! How much is the maximum amount for a payday loan exactly? Whether it goes through an online or physical credit institution, is the borrower still entitled to it? So many questions that are answered here!
What are the specifics of the payday loan?
As a reminder, the payday loan is part of consumer credits and is governed by the Consumer Code. Unlike the assigned credit, the payday loan is not linked to a specific purchase. It allows the borrower to finance the project or projects of his choice, excluding real estate. Wedding, car, services (work or travel, for example), household appliances, medical expenses, study fees … these are some of the projects that can be carried out thanks to payday loans. As with any other loan, the borrower will make a repayment in installment to the lender, in accordance with what is stipulated in the contract. Most often, it will be monthly payments.
Maximum amount for a payday loan: verdict?
Many future borrowers wonder what is the maximum amount of a payday loan. And for good reason ! This form of consumer credit is among the most popular with consumers. This is partly explained by its ease and speed of obtaining, the borrower not having to justify the future use of the funds. In accordance with the law of July 2010 on the reform of consumer credits, the maximum amount that the lender can grant to the borrower in the context of a payday loan is 75,000 dollars, compared to 21,500 dollars previously. This is a considerable maximum sum, which allows the borrower to carry out important projects.
Note: and regarding the duration?
A payday loan contract can generally be concluded for a period ranging from 6 to 84 months, rarely beyond.
A payday loan, yes, but at what rate?
When it is fixed, the rate of a payday loan essentially depends on the amount borrowed and the duration of repayment. The shorter the repayment period, the lower the borrowing rate. In other words, if the borrower opts for higher monthly payments, the total cost of his credit will be lower. On the other hand, the larger the amount borrowed, the more the borrowing rate decreases. The total cost of the loan will not necessarily be cheaper in value (in dollars), since the rate applies on the amount borrowed, but it will be in relation to the amount borrowed.
The credit institution used by the borrower also counts! With a similar amount and repayment duration, a credit contract offer can have a very high rate, compared to another. This is why before signing an offer, the borrower should take the time to compare. One indicator in particular will allow it to compare quickly and efficiently: the APR. On a credit offer, this mention is compulsory. The APR takes into account all the costs relating to the credit, such as the application fees, the nominal rate and the borrower insurance.
To save even more time, the borrower can use online payday loan comparators and simulators.
Good to know: insurance delegation, a right
The borrower is not obliged to take out insurance with the lender if the latter offers him one. He is entitled to insure his loan elsewhere. The goal is of course to reduce the total cost of credit.