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Looking for payroll credit? Check its advantages and disadvantages

If you are urgent to get a considerable amount of money, payroll credit can be a good option, if you qualify you get it very quickly, they do not ask for an endorsement and you do not have the obligation to use what they loan you for something specific.

These credits are often promoted by the banks themselves, they are pre-approved and they are offered to you. They are considerable amounts that the bank puts at your disposal; however, you need to be careful.

The amount of money they offer you in payroll credits can vary, it can be up to 500,000 pesos. Photo: Pixabay.

What are the advantages of a payroll loan?

  • You get that money fast. As the bank pre-authorizes your payroll loan, you can have it in 24 or 48 hours (on business days), they deposit it in your account.
  • The terms are variable and can reach up to 60 months. This is good if you want to make small payments.
  • You can make your payments every fortnight or per month.
  • The amount of money they offer you in payroll credits can vary, depending on how long you have been in your job and the amount of your salary, it can reach up to 500,000 pesos.
  • Every time your salary is deposited, the bank will take your corresponding payment, so the only way you will avoid paying will be when you lose your job.
  • If you lose your job, you will have the right to unemployment insurance, whose costs and conditions vary, although it is almost mandatory to hire it in all banks so that they give you credit.
  • A payroll loan can save you problems, because if you ask your relatives or friends for money, you can have them.

Disadvantages of payroll credit

  • During a period of up to 60 months you will commit a good part of your salary with the bank. You will have a decreased income.
  • You must pay commission for opening the credit. In some cases it is high.
  • Unemployment insurance is conditional on being given the credit.
  • It is a very expensive loan. You can pay more than double what they loaned you for the high interest.
  • If you have a bad rating in the Credit Bureau, it is almost impossible for them to authorize the credit.

Recommendations about payroll credit

  • Think carefully before requesting or accepting payroll credit.
  • The discounts they give you will be a considerable amount of your salary.
  • The recommendation is that you only ask for the payroll loan if you really need it, or that you invest it in a business that gives you higher returns than the interest you are going to pay.
  • Despite the similar conditions offered by banks, there are significant variations from one bank to another. It is pertinent that you review them.
  • Although these credits can be offered to you at the ATM or by phone, it is better to go to the bank branch and ask the agent everything you want to know, you can even ask them to make a run of the payments that you will make until you cover the total of your I owe.
  • Investing the money from your payroll loan in repairs to your house is a good option.
  • It may not make sense for you to use that money to go on vacation and pay the bank double what they loaned you.

More information in our Credits Section.

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