There are already different types of loans being offered by the banks and moneylenders today, depending on how much we need and to where we are going to use the money such as the personal loan, mortgage loan, education loan and the payday loan.
What are Payday Loans?
Are you familiar with a payday loan? This type of loan is also called a short-term unsecured loan; payday or cash advance and payroll loan where you will apply for a loan and repay your loan right after your next salary.
When having a payday loan, you won’t be able to borrow a large amount of money compared to other loans, but it is often acquired by Singaporeans who are in need of money badly but will pay the amount immediately.
Why do people go for payday loans?
● Financial emergencies
Are you looking for money that could cover a financial emergency but you’ll be paying immediately after getting the money? If that’s the case then, you can opt to have a payday loan instead. Applying for a payday loan isn’t that hassle compared to other loans hence a lot of Singaporeans who need money for an emergency purpose such as impending education loan repayment.
● Quick approval
The best thing when applying for a payday loan is that you can get your cash in a short period compared to personal loans where it could take a few days. A payday loan is indeed a good choice for those who are in a hurry and needs the money as soon as possible.
● Can be paid directly
When paying for your payday loan, they are usually being charged to your bank account hence you don’t have to go to your moneylender anymore. One of the things that bother us when paying for the loan is the effort we have to make to give the moneylender our payment, but with the help of your bank account, you can now directly pay your payday loan.
There are also some instances where the borrower would make a postdated check with the full amount of the loan plus the interest and other fees. You then have the choice to visit the lender to repay the loan in person, or you can have the lender go to the bank to get the money using your check.
● No credit check
If you happened to have credit history where you have unpaid loans, and you are afraid that you can’t have a loan because of it, you don’t have to worry about it since there are moneylenders who offer payday loans that don’t need credit reports anymore.
Problems with Payday Loan
Although getting a payday loan sounded like a great idea, there are also a few cons when having a payday loan such as the following:
● Payday loans are expensive
It is already expected that you will be charged with interest rate whenever applying for a loan, but payday loans tend to have a much higher interest compared to other loans. When applying for a payday loan, you should expect for a higher interest rate which makes this type of loan not suitable for those who are practical and wanted to save more money.
● Better alternatives
There are a lot of other options you can choose other than payday loan such as a personal loan where you can have more flexible repayment terms that you can afford. There are many short term lenders as well who can give you the money that you need without asking too many requirements from you.
You may also opt to use your credit card with a low-interest rate. There are other items that you can buy with your credit card that doesn’t charge any interest if you can pay your debt on time which is a good option for those who wanted to avoid high-interest rates from payday loans.
● Financial quicksand
Repayment terms for payday loans are shorter where you are usually given only two weeks to repay your loan thus there are a lot of borrowers who can’t afford to pay the amount right away and leaves them with no choice but to apply for another loan to avoid having additional loan interest.
Safer Payday Loans
Lenders have been very open with troubles when it comes to borrowers not being able to repay their payday loans on time hence they have been very strict with the borrowers now. If you can’t repay the loan on time, you can now be charged with 20% establishment fee plus another 4% every month if you still can’t pay your loan.
We may think that getting an education loan is easy, but there are also a few other things that we should consider and think about before we go for it. With all the types of loans being offered by banks and moneylenders, we must make sure that we can choose the right one that best suite our money needs by checking unbiased moneylenders review in Singapore.