Payday loan can be an investment? Or is it just a financial solution for times of crisis?
Incredibly, it may be both! Learn how payroll loan money can be applied to help you achieve other goals.
The largest of the Retirees, Pensioners, Government Employees and private companies , uses the payroll loan to solve emergencies and financial problems in periods of instability.
After all, this is one of the main uses of the loans. But not the only one!
What if the consumer can plan and use this money to open an e-commerce or buy a car , for example?
The payroll loan has an interest rate of up to 2.08% per month for INSS beneficiaries and 2.05% per month for Public Servants. These values refer to the nominal interest rate.
The idea of investing using the money of a loan is that this investment has the lowest possible risk.
To borrow a value and lose that money is to “win on one side and lose on the other”. And it is not necessary to be any financial expert to confirm that this does not make any sense.
Even because, in this way, the monthly income and the assignable margin will be unnecessarily compromised.
The assignable margin can be understood as the limit for monthly expenditure on the loan. Therefore, collection and planning are fundamental in this and any other financial strategy.
So one question remains: when is it worth investing the money?
When is it worth investing the money?
THE answer to this dilemma would be very easy: when the cost of the payroll loan is lower or when the investment income is higher than the payroll loan rates .
In other words, when the effectively money or good can be valued.
In order to arrive at this calculation, it is always necessary to consider the CET – Total Effective Cost of operations and not just the interest rate value.
Read also : Total Cost Effective: What are the costs of a Payroll Loan?
Briefly, the Total Effective Cost of a loan takes into account all the expenses of the contract. Such as: administrative fees, taxes, operating costs and so on.
On the other hand, if the value is used for investment securities, it is necessary to simulate profitability.
In the first case we talk about costs and, secondly, the percentage of remuneration of the money applied.
Having a clear purpose for the use of consigned loan money also helps to define what you need to compare:
- Interest Rates and Total Effective Cost;
- Time limits for payment and settlement of the security;
- Investment income;
It should be remembered that just as payday loan is a long-term debt, a financial investment can also take a long time to pay off.
But often, payday loan money can also be invested with other purposes such as a trip, for example.
So how do you evaluate this type of investment? Management professor Gustavo Peixoto explains:
In these cases, it is an investment, which does not necessarily bring some type of financial return, but is still considered relevant
Even though it is an intangible return, it must be seen as a good investment, to value the money in any way.
When paying cash for a trip with consigned loan money, for example, the consumer can save money and escape high interest from the financing or credit card.
Saving money is also a way to value money .
Therefore, this applies both to investments with returns, as stocks, to purchase property for rent, as well as investments that cut expenses or add professional value.
Get to know the 5 most common types of investments with the payroll loan .
5 types of common investments
But what investments are possible, and indicated, to do with a payroll loan?
Hardly will there be a financial professional who gives the magic formula of the perfect investment. That’s because it does not exist!
What exists is the most suitable investment for the life stage, availability for risks, profile and investor expectations. Exactly why financial planning is so recommended .
But some types of investments do not pay interest on the payroll loan. And most conservative investments are not worth it.
After all, to cover the CET of the payroll loan the monthly interest rate would have to be higher than 2 or 3% per month.
And yet the investor could leave without income after the period of application. After all, most of the loans are subject to taxes at the time of redemption.
Does this mean then that the loan can not be profitable and used as an investment?
Not if the client invests in something solid, that is not directly linked to the SELIC or common interest rates.
1 – Buying a property
Buying property and real estate can be a very good investment, especially in times of downturn in the real estate market.
Usually times of crisis bring down prices of goods. And anyone who has the money to buy at this time can have a high income when the recession period goes by.
The motivation may also be to stop paying monthly rent or have a second property as an investment.
When taking a paycheck loan to help purchase a property, the policyholder will pay the installments monthly until the end of the contract.
However, you may use the money in whole or in part to purchase the property. Generally, cash payments tend to yield rebates once the seller anticipates receiving the asset.
2 – Purchase of other goods
Just like in the case of buying a home, the money from the consigned loan can also be used for the purchase of other goods.
Buy a car, buy equipment, among others. Generally depending on the value of the asset, the amount is financed by specific lines of credit. Another option is to install the purchase amount by credit card.
However, it must be remembered that the interest rates of financings or credit cards are more expensive when compared to credit and payroll deductible credit card .
This can be more than 300% per year, on average.
3 – Investment in studies
Making an investment in the studies can be a great outlet for those who are looking for a promotion at work, for example.
This may include language, specialization, undergraduate or postgraduate courses. Here or abroad. As a private investment or for children and grandchildren.
Depending on the type, duration and specialty of the course, the value can be considered high. An alternative in this case is to hire a payroll loan to pay part or the entire course.
The expense, or rather, the investment to take courses that add to the studies, certainly, brings a return in the medium and long term.
4 – Open your own business
Even those who are employed may choose to have their own business as an alternative source of income. Other motivations may be having a family business or employing children.
Retirees and INSS Pensioners , may also choose to have a new occupation.
Using payroll loans in this situation can be a great idea.
But keep in mind that opening a business does not generate instant revenue. The average is that the company needs at least a year to bring return to the investor.
It is therefore advisable to plan and evaluate whether it is possible to pay the payroll loan monthly payments until you start receiving the income from the new company.
For a safe investment, the recommendation is also to evaluate the business options that are most feasible. Franchises, micro-franchises or online businesses are among the most sought after investments.
5 – Taking a trip
Taking a trip is an investment. And a great investment, by the way! Knowing languages, cultures and new scenarios can be extremely enriching.
Regardless of the reason for the trip, it is worth looking for ways to travel cheaper. And this is not related to the worse options of transportation, hotels, meals.
To make a quiet trip, a smart alternative is to seek credit lines that offer lower interest rates .
Find out now what are the main advantages of using payroll loans as an investment .
Advantages of using Payroll Credit as an investment
Some of the reasons cited are the dream of most Brazilians, and they can be conquered in other ways.
So why use payday loan for this? Get to know the top three reasons now.
Gain faster access to goal
Shortening the journey to conquer a dream is one of the advantages of using the payroll loan as an investment.
If the Public Servant, Retiree or Pensioner or CLT worker has part of the capital to buy a property, but it will take three years to get the other party, you can take that amount on loan and reach your goal in a matter of days.
Having available assignable margin is possible to contract loan or consigned credit card, without bureaucracy .
In many cases, payday loan can be the cheapest form of credit. In this way, it can enable the desired investments.
Saving money, as already mentioned, is also a way to use loan money wisely.
Reinvest the money
Lastly, two advantages that few people consider when taking a payday loan as an investment are:
- Use the money to repay the loan;
- Become a long-term investor.
If the income earned is already sufficient to pay off part or the outstanding balance of the payroll loan contract, it is a good sign.
When you withdraw the loan agreement, the assignable margin is uncluttered and releases a new credit limit .
In addition, another option is to make new investments.
Many people have begun to pay attention to the possibility of living on income.
And making investments that bring income increases the chances of reinvesting. That is, to use the money of rents, interest, rates or profits from this strategy, for new investments.
For this, it is enough that the process of investing is done with much planning and knowledge. Studying, planning and seeking the help of a professional can avoid mistakes and losses.