Personal Payday loan refinancing functions as a renegotiation of consigned credit debt .
This is because, instead of releasing a new loan, the bank releases the customer the value of the installments he has already paid, so he can use again.
How Does Personal Payday Refinance Work?
Personal Payday loan refinancing works as extra credit for clients who already have an open loan in a bank but have compromised the full salary / benefit limit that is earmarked for the use of Personal Payday.
When the client makes the request, the bank assesses whether he is eligible for refinancing, that is, whether he has already paid at least 20% to 30% of the current loan.
Recalling that the refinancing may not be approved, depending on the benefit and the conditions established by the Bank. Therefore, it is necessary to verify with the institution the possibility of refinancing.
After that, if refinancing is approved, the bank will restart the loan and the customer’s assignable margin. That is, it will release the value of the installments already paid, added to the amount that has not yet been removed.
Margin – This is the part of the salary that can be used to deduct the value of the installments of the Personal Payday loan. Learn more in the post: Margin: What is it and how does it work?
To better explain refinancing, let’s look at the example:
That is, the Bank added up the value of the 18 installments with those that had not yet been paid and divided the total value by 72 times.
What is the refinancing interest rate?
The Personal Payday interest rates may vary by bank. They amounted to around 2.11% per month, being one of the lowest in the market, compared to other credit modalities.
It is important to remember that in refinancing, the interest rate should be equal to or less than the rate applied at the beginning of the loan. Thus, the installments will not be worth more than the current loan, which makes the process advantageous for those who request it.
How do I pay?
The refinancing installments are automatically deducted from the Personal Payday of the INSS beneficiary or public servant. The discount is made by the paying institution, be it the INSS, in the case of retirees and pensioners, or the SIAPE, in the case of municipal, federal or state public servants.
The Central Bank regulates that the amount of the discount can not exceed more than 30% of the beneficiary’s income . But if you want to pay a higher amount than the maximum stipulated by the margin, the client can request the advance of the installment, and thus, repay the loan faster.
Can I refinance in another bank?
No. Refinancing must be done at the same bank where you have the loan. To refinance in another bank, first, you need to do portability, which is to transfer your loan from one bank to another.
It is important to remember that you can only do portability if the Target Bank has the same or lower interest rate than your current bank.
For example, if the current interest rate is 2.10%, you can only carry your loan to another bank if the interest rate is equal to or less than 2.10%.
To learn more about loan portability, read: Bank Portability: Know what it is and know the main advantages .
Refinancing can be helpful in many situations, but just like other credit operations, it is important that you evaluate your financial situation and the conditions offered by the bank before you place your order.
It is also important that you understand the operation well. So, read the post: Personal Payday Refinancing: Know the details of this operation and know everything about the process.