Online loans are a great way to get quick financial help in case of sudden expenses. They are simple, widely available and are often referred to as the so-called instant loans – no formalities or certificates. However, it is not always possible to pay them back on time. Sometimes there are other unforeseen expenses or twists of fate, which can make the repayment of the loan difficult or even impossible. It is not worth waiting for the loan to expire, because it will mean serious consequences, including high fees or even a debt claim. So where can you look for more financing if the bank refuses to cooperate? An employee loan can help.
When and where can I use the employee loan?
Employee loans are granted from the loan and assistance fund. This, unfortunately, is not created from above in every company, but only in those in which at least 10 employees declare to belong and create such a cash register. This involves the payment of an appropriate fee, i.e. the entry fee, the amount of which is determined depending on the amount of the average remuneration (it can be several dozen dollars or e.g. 1% of the amount of the average remuneration). Moreover, the members of the credit union must bear the costs of maintaining the same, which means that the amount is deducted from their monthly salary. An employee who has already achieved a specific seniority may take advantage of the possibility of taking such a loan. It can be set freely, but usually it will be half a year.
There is another type of employee financing, i.e. a grant from the company social benefit fund, which can be obtained in the event of unforeseen mishap, co-financing of housing or health needs. If possible, it can even be non-returnable. Unfortunately, this will not be a way to pay back payday loans, because it is a special-purpose loan.
What are the types of employee loans?
There is no one predetermined form of employee loans. It can be a loan, both short- and long-term, installment, with or without guarantee. The rules for granting loans, including its interest rate, the maximum number of installments, the repayment method are specified in the loan statute or regulations.
Is it worth using an employee loan?
The undoubted and the biggest advantage of such loans is the fact that they are very low interest rate, and sometimes they are completely free of the cost of such a loan. In addition, repayment is automatic and the installment is always deducted from the employee’s salary. On the one hand, it is depriving him of some part of his monthly income, but on the other – he does not have to worry about the fact that loans in one month will not be able to repay, or forget about repayment.
Unfortunately, such a loan also has its drawbacks, which sometimes can cancel the chances of paying off payday loans. It is primarily low availability of this type of loans – one can observe a smaller and smaller interest in such loans among employees due to the availability of other loan forms, including online payday loan. You also have to take into account that the amounts available for borrowing can have a very wide range, depending on how many members of the loan and relief fund are and what funds it has. In addition, obtaining such a loan will involve the completion of various formalities and a relatively long waiting period for granting the loan. Therefore, they will not be a help in really urgent expenses, especially payday payments. The only solution in this case would be simply applying for such a loan in advance.
Another problem we may encounter is the termination of the employment relationship when the employee has not yet repaid the loan. The employee who has been dismissed by an independent decision of the employer finds himself in a comfortable situation, in which case the loan will be repaid on schedule. It is worse if the employee himself has given notice or if he has been disciplined. Then the workplace has the full right to terminate the loan agreement and demand immediate repayment.
Free payday loan to pay back the previous one?
As we mentioned, employee loans are very attractive mainly due to their very low interest rate. It is logical that if you want to save on another loan to pay off the previous one, you prefer to avoid additional fees. However, taking into account the disadvantages of an employee loan, it is worth considering taking a free payday loan, which can be obtained in 15 minutes.
This solution is definitely not recommended for everyone, but only for those who can think carefully and plan their home budget or, for example, have the prospect of obtaining additional cash that would allow them to pay off the next payday soon. Either way, a borrower who doesn’t want to use another payday loan has a number of other options that will be safer:
- Extension of the repayment period or refinancing – a solution that involves fees, but allows you to get some breath and not expose yourself to the consequences of non-repayment. Instead, you can tailor the loan extension to your needs and apply for an additional 7, 14 or 30 days.
- Taking an installment loan – this solution will also be quite costly in general, especially when compared to an employee loan, which will also be repaid in installments. The advantage of such a loan is, however, the fact that it is more easily available than an employee loan, no one will ask the applicant how to spend the money, and also that it can be obtained very quickly.
One could wonder which loan would be better. It is true, however, that each – both employee and non-bank – will have its pros and cons. Which of them will prevail will depend entirely on the borrower’s situation. So consider all options before we make a decision. Another commitment is an additional burden that should be thought twice.