Good Finance and credit card work largely in the same way; The loan can be activated whenever needed. But are these two ways of borrowing similar in cost? We calculated!
What is Personal Payday Credit?
Personal Payday Credit is typically small in magnitude, up to a few thousand euros worth of loan. Good Finance is an unsecured credit that can be made available whenever needed. This means that you do not have to credit the entire loan amount at once, as is the case with ordinary consumer credit. In a Personal Payday loan, interest is only paid on the amount drawn and not on the amount of credit granted. It is worth noting that for each drawdown of a loan, a withdrawal fee is usually charged, which may increase the total cost of the loan considerably if the loan is frequently withdrawn.
In a Personal Payday loan, a loan repayment will repay the loan back to the customer. For example, if a customer has been granted a EUR 2,000 Personal Payday Loan of which he has drawn on a EUR 1,000, and the Customer is repaying a loan for EUR 500, after a repayment it is possible to withdraw a EUR 1,500 Personal Payday loan. Good Finance therefore follows much the same logic as a credit card.
As a result of the amendment to the Quick Leverage Act, almost all Express Leverage companies shifted to offering Personal Payday loans instead of Quick Leverage in order to circumvent the interest rate cap imposed by the law on Quick Leverage. In practice, circumventing the law is by asking the customer to apply for a $ 500 instant nail, but getting a $ 2,000 Personal Payday Loan, which is not covered by the interest rate cap.
How does a credit card work?
The operating logic of a credit card is similar to that of Personal Payday credit. Your credit card has a certain amount of credit line that can be used to obtain credit. When you pay off your credit, the amount of credit is released again for your use. Typically, credit cards have about a month of interest-free payment, so it’s a good idea to try to reduce your credit card bill as much as possible during the interest-free month.
Which gets cheaper?
Because credit card and Personal Payday credit work on the same principle, one might think that it doesn’t matter which type of credit you use to finance your purchases. But is that so?
We calculated the total cost of a loan if you borrow the same amount with both a credit card and a Personal Payday credit. The amount of the loan for each comparison loan is € 2,000. In the example, the loan is raised in two installments of € 1,000, and the second installment is drawn up 2 months after the first installment is drawn. In all examples, the loan is repaid in full 12 months after the first drawdown date.
Please note credit card usage
Although a credit card provides to be a cheaper option than Good Finance Credit in comparison, there are some stumbling blocks to using it that you should be aware of. One of the stumbling blocks is definitely paying off your credit card bill; There is always a minimum amount on the credit card bill, which should be shortened. However, the minimum amount does not mean that the credit should not be paid off more. In any case, reducing the minimum amount is simply not recommended, and you should always try to pay as much as possible in order to avoid accruing interest.