Payday Loan – Choose Between Down Payment, Advance or Loan

 

The Payday loan

The Payday loan

The payday loan granted by an employer to one of his employees falls within the same legislative framework as the payday advance and must be exceptional. The repayment terms are the same, namely that the employee can not repay a payment exceeding one tenth of his monthly salary.

On the other hand, it is granted outside the conventional framework of the employment contract, which means that the employer can claim the remaining amount in case of departure of the employee of the company.

Finally, be aware that the loan granted by the employer can not be granted with interest. So it’s 0% credit.

You do not have to give proof when you apply for a loan to your employer. It must be the subject of a private contract, that is to say between the company and the employee if it exceeds a certain amount set by decree.

Namely : the employer who does not want to take risks can quite ask for financial information to his employee to avoid a situation of overindebtedness. In no case is it obliged to provide these elements. However, the company may then refuse to grant the loan.

In addition, it meets the same tax rules as the loan between individuals. Thus, if the amount exceeds 760 euros, the employer must declare before 15 February of the current year the amount loaned to taxes.

The deposit

Applying for a loan from your employer does not necessarily mean getting into debt. By claiming an advance payment from his company, the employee only receives his due.

What the law says

What the law says

It is the Labor Code that specifies how pay must be paid and your employer is bound to respect it. Your remuneration must be paid at least monthly (with some exceptions). The company therefore pays the employee a shift in the work performed.

Example : As of March 15, you have already worked 2 weeks, but you will not receive the corresponding salary until the end of the month. This is why the legislator makes mandatory the payment of the deposit (not to be confused with the payday advance which is similar to a Payday loan).

The advantages of such a solution

The advantages of such a solution

If the financial difficulties are limited in amount and duration, the principle of the down payment remains, for many reasons the most practical solution. First, it avoids resorting to a consumer credit which ultimately is always more expensive.

Then, he avoids the formalism that surrounds the subscription of a loan. Finally, it can avoid feeding the “credit reflex” which, often, involves a risk for the most fragile households. Whichever solution you consider, we advise you to avoid permanent credits that prove to be the most dangerous.

How to ask an employer for a deposit?

How to ask an employer for a deposit?

The Labor Code imposes no particular formality. However, it is customary (and certainly faster) to speak to your chief of staff (or directly to your boss if you are in a small company).

But whatever your relationship with your company is, it is best to ask for the deposit in writing and hand in your request.

The maximum amount of the deposit you can claim can not exceed the fraction of remuneration corresponding to the work already done.

Encrypted example : you make your request on the 20th of the month. Your net salary is 1800 €. You can collect a deposit of: (1800 X 30) / 20 = 1200 €

You can therefore ask 1200 € by anticipation on your salary since you have already done the work corresponding to this sum.

Namely : if a portion of your salary is based on commissions or variable bonuses, the down payment must be granted on the most accurate estimate of remunerations affectively acquired regularly.

The payment is made in the same way as the salary, that is to say by bank transfer or check.

Important : the amount paid is net of social charges. These will be deducted from the end-of-month salary.

Payday advance

Payday advance

Unlike the down payment, the payday advance is the payment of a fraction of the salary corresponding to work not yet done. Clearly, you ask to receive a salary before having started the work for which you are paid.

Unlike the down payment, the Labor Code imposes nothing on the employer. This one is read to accept or refuse to give you advance. The legislator has simply provided the terms of repayment if agreed by your employer.

  • Know the difference between a loan and a payday advance.

Terms of repayment of the advance

Terms of repayment of the advance

If your employer makes a payday advance, he must respect the reimbursement rules set out in the Labor Code, namely that the monthly repayment of the advance can not exceed 10% of your monthly salary.

It equates to a Payday loan. As a result, it is not subject to social security contributions when the employee reimburses by his own means.

Important : in case of departure, the company is entitled to claim the outstanding capital.

As you understand, the payday advance is not an employee’s right and you will not be able to do anything if your employer refuses to grant it.

Case of a real estate project

Case of a real estate project

If you are preparing a real estate project, it is best to check if you can get an employer loan. This is an enhanced loan for borrowers working in companies with more than 10 employees.

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