Personal payday loan – what to take note about this loan?

Personal payday loans have special online platforms. These then broker the loans from private individuals. A solution may be found for those who do not get a loan from a bank.

Personal payday loan

Personal loan

To take out a loan, you don’t necessarily need to go to a bank. Money can also be borrowed from private individuals.

Relatives or close friends are the simplest solution, since it is usually also possible to save interest.

Advantages of personal payday loans

Advantages of personal loans

Taking a loan from relatives or friends has several advantages. Firstly, there is no demand at credit check and no entry is made for a loan. In addition, the loan agreement can be made easier than at a bank. There, the personal payday loan application is significantly more extensive. Because as a private person, the terms of the loan can be freely decided, legal regulations do not have to be considered here.

The situation is different for banks, because certain conditions must always be met here. A credit check will always be necessary to check the borrower’s creditworthiness . Having to show proof of salary is not uncommon. With a private loan , however, it is not absolutely necessary to agree collateral. On the other hand, a transfer of income often has to be approved at a bank.

Disadvantages of personal payday loans

Disadvantages of personal loans

Even though it may sound simple at first to take money from a private lender as a private individual, there are still a few things to keep in mind. A contract should always be drawn up, even with a personal payday loan .

This way, all important points are recorded in writing, because problems can quickly arise with verbal agreements. It is important to define a term here, otherwise the lender can cancel the loan at any time with a three-month notice period. The entire amount would then be due.

Other points to be recorded would be the loan amount, the payment and repayment dates, and the interest rate. A major disadvantage is the lack of consumer protection. Because in the event of a dispute, a private borrower cannot contact a consumer protection organization. In the case of a private loan within the family or between friends, there may also be inconsistencies that can put a permanent strain on the personal relationship.

It should therefore be carefully considered whether a loan from family or friends is an option.

Private loan as a lender

Private loan as a lender

As the one who gives personal payday loans, there are also a few things to consider. The income, i.e. the interest from personal payday loans, must be taxed, for example. If there is a loan between relatives, the interest income is taxed differently depending on the purpose of the loan. You should inquire here beforehand.

About the Author