Business

Should you ask for a payroll loan? We tell you how to do it

We explain what payroll credits consist of and some frequently asked questions that arise before requesting it.

4 min read

This story originally appeared on High Level

Should you ask for a payroll loan? We tell you how to do it
Should you ask for a payroll loan? We tell you how to do it

It has ever happened to us, for some reason or another, the salary is not enough for us to reach the end of the fortnight or some unforeseen situation arises and we do not have enough money at hand.

Therefore, in recent years the number of people using payroll loans has increased, due to how fast and simple it is to apply for them and because the loans are secured with the money deposited from your work.

The total payroll loan portfolio granted as of June 2019 was made up of 4.3 million loans and a total balance of 252.7 billion pesos (MDP), according to the figures of the Bank of Mexico (Banxico) .

We explain what payroll credits consist of and some frequently asked questions that arise before requesting it.

What is a payroll loan?

These are loans that are granted to workers whose salary is paid to a payroll account , by the same banking institution that offers the service where the payment is directly deducted, without having to mediate an intermediate process. These are payroll credits .

Since credit payments are domiciled to the payroll account , these types of loans can only be obtained at the same financial institution as the account.

What is the difference with a personal credit?

Unlike personal loans, no guarantee or guarantee is needed . In addition, the monthly payments are deducted directly from the account in which they receive their salary . Therefore, one of the main advantages is that the payment guarantee speeds up approval times.

“It is important to note that the automatic collection of credit, charged to the resources deposited in the worker's account, eliminates the repayment decision, making these credits convenient for the debtor, who does not have to take additional actions to pay,” Banxico points out in its document Basic Payroll Indicators .

How to order it?

You must request it with the bank where you receive your payroll. In addition to having a good credit history and ability to pay, the applicant must have at least three months in their current employment and have received their payroll payment for at least one month.

How much do they lend me?

According to information from Banxico, the average amount of payroll loans at June 2019 was 70,000 pesos. While half of the loans granted were for an amount less than or equal to 36,000 pesos, while 5% of the loans have been for around 250,000 pesos.

What are the deadlines to pay it and how much do they charge interest?

The information, current as of June 30, 2019, analyzed by Banxico, shows that the average interest rate weighted by balance for loans granted in the last year was 24.9% , with an average amount and term of 70,200 pesos and 44 months .

The institutions that granted payroll credit at the lowest weighted average interest rates were:

  • BBVA: 20.7%
  • Bank of Baj√≠o: 23.5%
  • Afirme Banking: 24.5%

Loans with an original amount greater than 40,000 pesos granted in the last year, showed an average interest rate of 24.2% , 3.3 percentage points lower than that of loans of less than 40,000 pesos. In addition, the average amount was 131,000 pesos .

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