MonthJune 2019

Payday loans & bull

Payday loans

Personal loans

Payday loans are granted to people who qualify according to the standards of each bank and for different individual reasons, such as acquiring housing, paying debts, etc. The interest rate in these cases plays an essential role. Financial institutions are free to offer the interest rate they want, so for these loans the value usually varies.

Things to keep in mind of payday loans

Things to keep in mind of personal loans

It should be taken into account that very short-term payday loans (less than one year) or small amounts, commissions can become very important for the cost of the operation. In fact, there are entities that offer operations at zero interest rates and that achieve profitability through commissions. In this sense, these loans represent an important source of profits and at the same time facilitates people access to money.

Types of payday loans

Types of personal loans

There are 3 types of loans according to the interest rate:

Loans with fixed interest

In this type of loans, the interest rate remains the same throughout the term of the contract, and therefore the total amount of interest to be paid is known from the beginning.

With fixed interest, both the financial institution that has lent the money and the client are exposed to a phenomenon, called interest risk that occurs in the following cases:

  • If interest rates decrease, the client cannot benefit from the decrease, since he can pay a higher price than he would if the operation hired him at that time.
  • If interest rates rise, the opposite occurs, it is the Financial Entity that has been harmed since the client does not affect the client.

Variable interest loans

In this modality, the interest rate is modified throughout the term of the loan based on the evolution of the index or type that is taken as a reference. If you are going to ask for a loan and want to opt for a variable interest, you must compare the offers and those planned in the future, both from the point of view of the margin or difference and the index or type of reference chosen (it may be the Euribor), due to which large differences can occur between them.

Mixed interest loans

These loans combine periods of fixed interest and variable interest. In this way, the benefits of these two modalities are obtained. For example, it is possible to find a loan in the market in which a fixed interest rate is obtained for two or more years after which a period in which the rate is variable starts.

Facts about Unsecured Loans

As discussed earlier, an unsecured loan is legitimate to be used as a solution for fast funding needs. However, some careful consideration is needed to guarantee the return.

For your consideration, let’s look at 10 facts about unsecured credit:


Doesn’t Need a Guarantee

Lots of Additional Costs

It’s called unsecured credit, of course, the first fact is that this credit does not require collateral or collateral in its submission.

Therefore KTA is also called unsecured loan , because this product includes high risk credit products due to the absence of collateral or collateral for loans. 

This is different from other credit products such as KPR or Multi-Purpose Loans (KMG), which certainly require collateral to be used so that funds can be disbursed.

This lack of obligation to include collateral makes unsecured loan an attractive choice for those who need cash loans in a short time.


Loan Amount (Loan Ceiling) Is Not Too Big

Loan Amount (Loan Ceiling) Is Not Too Big

Because the risk of the bank in loans without collateral tends to be large considering that there is no guarantee or collateral that is the bank’s hand in providing credit, the loan ceiling provided is generally not too large.

This is done to minimize possible losses. For example, BNI provides the following loan ranges:

  • Minimum loan amount: 5,000,000 rupiah
  • Maximum loan amount:
    50,000,000 rupiah (if payroll is not via BNI)
    100,000,000 rupiah (if payroll via BNI)


Interest rates per year are quite high

Interest rates per year are quite high

Because there is no collateral that guarantees your loan or credit, the bank generally minimizes the risk by providing a high enough interest rate.

The amount of interest charged varies for each bank in the range of 10% to 23% per year. Types of interest rates charged on the unsecured loan is a fixed interest rate (fixed) so that its value will always remain in each period.

Interest costs will be calculated according to the amount of the loan agreed before deducting the provision fee.


Tenor tends to be shorter


Generally, the tenure of the unsecured loan is shorter when compared to loans or loans with collateral (collateral). The maximum tenor that applies to unsecured loan is usually 60 months or 5 years.

Well, you should always check the tenor before deciding to take unsecured loan. Why?

Because the tenor affects the installments. You need to measure your ability to pay according to the applicable tenor.


Terms of Submission are Easy

Terms of Submission are Easy

As mentioned earlier, Personal Loan (unsecured loan) is a loan product provided by financial institutions such as banks.

Because it involves the issue of lending and borrowing that is legal in the eyes of the law, of course there is an agreement that regulates all the terms and conditions that apply to both parties. When compared with other types of credit, the requirements for applying for unsecured loan are indeed easy. This is intended so that submissions can be processed more quickly so that loan funds are quickly liquid and can be used immediately.

In addition to the document requirements, there are usually other terms assessed from your person. For example:

  • Your credit score must be good and the credit category is smooth.
  • Have clear staffing or professional requirements.
  • Has a minimum income that matches the requirements, and there are still many other conditions that vary in each bank.


Funds can be used as needed

Funds can be used as needed

Different from some other types of credit, you can use an unsecured loan for any need. An unsecured loan is generally used for consumer needs that require fast funds, including:

  1. House renovation
  2. Wedding
  3. Treatment
  4. Venture capital

This is certainly very different from investment credit or working capital loans from banks. Working capital loans, for example, must attach financial statements of businesses to be financed, business licenses, business taxation, and so on.


Lots of Additional Costs

credit loan

Don’t be surprised when you receive a loan, because the amount is definitely less than the agreed amount. Why is that? This can occur because of additional costs that may arise when you apply for unsecured loan.

For example, fees or administrative fees will be deducted directly from your loan ceiling. These fees vary in size depending on the type of bank but generally range from 1% to 4% of the loan ceiling.

In addition to provision fees, there is an annual fee. Not all banks impose annual fees on their unsecured loan, depending on the policies implemented. But if there really is, this annual fee is charged to you every year and usually the value ranges from 1% to 2% or in a certain nominal value (for example 100,000 rupiah per year).


Can’t Be Late to Pay, But It Cannot Also Be Accelerated


Well, this needs to be considered if you often forget to pay installments. Late fees are fees charged to you if you make late monthly payments. The magnitude varies but usually changes depending on the time of delay. Thus, always mark your calendar to pay the exact amount and on time!

However, that does not mean you can also pay off unsecured loan faster than the agreement. This is because banks generally impose accelerated repayment fees.

In other words, you will be fined if you repay the loan faster than the agreed tenor of the loan. The amount varies again, but ranges from 5% to 6% of the remaining loans.

Then consider carefully before you choose to pay off the unsecured loan before the deadline, do not let the penalty be greater than the remaining loan plus interest.


Using Flat Interest Rates

Loan Amount (Loan Ceiling) Is Not Too Big

All unsecured credit products or unsecured loan in the bank apply a flat interest calculation scheme. The type of interest rate that is considered the simplest and easiest calculation compared to the other 2 types of credit interest.

On flat rate loans, the calculation of the loan ceiling value and interest will be calculated proportionally according to the tenor or the length of the loan.

The calculation formula used in flat interest rates is as follows:

Interest per month = (P xixt): jb



  • P = loan principal
  • i = interest rate per year
  • t = number of years of credit period
  • jb = number of months in the credit period


This method of calculating interest does not take into account the amount of debt that you have paid. Interest is calculated always based on the total debt principal at the beginning of the loan.

The monthly installments are always fixed. Because of the calculation method like this, flat flowers appear as the most expensive interest count.

Should I transfer my mortgage credit at this time?

Many clients ask me if this is the right time to request the transfer. They think that in a few months they will lower rates a little more. I will tell you the analysis I do with them every time they ask me “Should I transfer my mortgage credit?

I transfer my mortgage credit or I do not transfer my credit …

I transfer my mortgage credit or I do not transfer my credit ...

That is the question. Many wonder about the convenience of making the request at this time. And is not for less. They have been attentive to the news about the financial sector and the real estate sector.

Analysis of the real estate sector

The first consideration I make with my clients is the analysis of the economy, specifically the real estate sector.

Since last year, construction has become a strong government issue. The sector is a source of employment, engine of the economy. But, in addition, two events moved the dynamic: the construction of the sports stages for the Pan American Games and, with special emphasis, the reconstruction of the damages caused by the coastal Child.

During this period, we have witnessed the birth of new subsidies – the last one for green homes – and new incentives for buyers, such as the one that will encourage real estate sales from leases or the reduction of the initial fee for the purchase of second homes. .

Indeed, the sector has responded and today a sustained growth trend is expected for the rest of the year.

Rate Analysis


The second part of the analysis is about rates. The financial sector understood the signals of the Central Reserve Bank of Peru and the government. Rates fell and credits were energized. In the last seven years, rates have fallen on average three points. Three points is a lot of money.

A good cycle

Since 2003-2004 we did not witness such a favorable trend. In fact, specialists say that if the trend continues, as expected, we will reach the same levels of those good years for the real estate sector.

Now how does the good news affect you?

Good behavior of real estate sales has an important effect on the price of real estate. Upward, in most cases. Those who bought a few years ago have done a good business. And those who acquire now, too.

And, of course, the second effect is on the cost of credit. A few years ago, the rates were higher. The cost of money was higher. Many credits were negotiated at rates of more than 10%. Many have paid seven or eight years and the best years of the total credit period are missing. The question is: at what rate do you want to pay it. To the same one that you negotiated a few years ago or to a new one, a lower rate, like the one that the banks offer today.

Most of the evaluations we carry out in our work show us that those who request mortgage transfers from a good business: they lower the interest rate, lower the monthly fee, new tastes and new investments are allowed.


In that order of ideas, expecting a drop in fees to apply for your credit may be more risky than doing it now.

Are you ready for a transfer?

Are you ready for a transfer?

In seven, eight years, many things happen. Change of work, change of salary, change of marital status. New debts, more consumption with your credit cards. Even today, they are likely to represent a lower risk as a client for any financial entity. All that affects your credit.

Our recommendation is to study your business. I compare it to the scheme that many companies practice in their logistics and purchasing departments. They evaluate from time to time if they can get better prices with other suppliers. It is the same case with your credit, from time to time you must analyze if it is convenient for you to transfer your mortgage credit. This is the time to check if you can access a better rate and end up paying less money for your credit.

Is an appraisal necessary for the transfer of mortgage credit?

One of the requirements for the transfer of a mortgage loan from one bank to another is to appraise the property, that is, to contract the services of a professional appraiser to establish the price of the property.

This happens even in relatively new properties!

This happens even in relatively new properties!

It seems easier to set the price by looking at what goes on around the property. For example, the builder is still selling real estate, just ask him. There are new projects in the area and we could find out how the square meter is. Or even the price in the deed would suffice. After all, it has been a short time.

Why do you need a new appraisal?

Why do you need a new appraisal?

What business do you want to do with the property? The purchase of mortgage credit. That is, you are going to request that a bank lend you money and offer your home as a guarantee of payment.

The bank requires appraisal

The bank requires appraisal

The question asked by the bank is: in what state is the guarantee offered by this client in exchange for the money borrowed? Does it comply?

It may seem obvious that if your house is new (less than five years old) it is in good condition. But not all owners are always as careful as you.

    • They make reforms that alter the original design, eliminating, for example, natural lighting or air flow in some spaces. Sometimes they affect the comfort of spaces.
    • They quickly determine floors, windows, doors, bathrooms, kitchen and closets.
    • They change the original finishes, modifying the initial price.
  • They make changes that add areas such as a study, a terrace or a room.

In addition, situations in the environment can also affect the price and you don’t know it:

    • Track construction
    • Construction of parks or shopping malls
    • New neighbors who value or devalue the area.
    • Change of use of a neighbor as a warehouse or an old school.
    • Change of municipal regulations.
  • Fee for the maintenance of urbanization.

Banks hire the best appraisers. The reason is simple: if the price is adjusted to reality, the guarantee is safer. And the best appraisers are able to apply the rules of the National Appraisal Regulation (Ministerial Resolution 172-2016-Housing) and the formulas, which are worth saying, are many. And, perhaps this is the most important thing, you have a great knowledge of the city, of future works, and are able to establish its impact on the value of real estate.

Currently, it may seem better to avoid the cost of an appraisal. But it is very useful. If you were negotiating the purchase of a good, would you not be sure of the price? It is not enough to see the facade, the state of the elevator, the view or the kitchen. The age, and above all, what is to come in the area, determine whether the price will fall or rise in the future.

That is why it is established by rule that it is mandatory for banks to request pricing.

In the case of brand new houses or apartments, the appraisal can be estimated to be equal to that of the sale. It is clear: it is the builder who is estimating the impact of the environment on the real estate!

But, when you want to transfer your debt to another bank, that price should be revised. Otherwise, the bank would be missing the law. You must make an appraisal in all businesses that imply a mortgage guarantee.

But not only the financial institution will demand it.

The insurer requires the appraisal

The insurer requires the appraisal

The insurer needs to establish the exact value to determine the viability of the insurance and its cost.

Do you remember that other requirements for the transfer of your mortgage loan are all risk and lien insurance?

The insurer must have the fair value of the asset to answer for the correct value in the event of an accident. The price of the appraisal should reflect the renovations of floors, woodwork and improvements in the kitchen!

Of course, it makes no sense to invest in a property with a mortgage loan and not have a good lien insurance. Why insure for less value? It could be causal for not paying insurance just when it is most required.

As you can see, the ideal for all parties is to know the right price, to make the appraisal.