Essential or Unnecessary: When Should You Consider a Payday Loan in Singapore?
You’ve run out of cash and payday is still weeks away but you have bills to pay and are in need of some money. There are times when we get caught in this situation where a sudden emergency situation takes us off guard and we don’t have the required funds for it. In circumstances like these, loans can be of help if well thought out and planned. Loans, such as emergency payday loans from direct lenders, are popular for those who need cash urgently. However, this quick loan can come with many liabilities if not well-managed. Before looking for a payday loan in Singapore, it is good to find out all about them and compare a payday loan to other types of loans available.
What Is a Payday Loan?
A payday loan is a short-term loan specifically made for urgent situations. It is a sum that is given to you before your payday, which essentially brings forward your income for the month. Typically, your next monthly income would be used to pay off this loan, hence its name. You can apply for fast payday loans online from a licensed moneylender that offers the best payday loans in Singapore. However, you should always shop around and enquire with different moneylenders to compare payday loans and rates.
Payday loans in Singapore are known to be a high-cost loan, which means planning your finances and ensuring you can repay the loan are extremely important. You should compare payday loans in Singapore as rates can differ for each moneylender but don’t get misled to pay for an interest rate higher than the market price. To understand how extravagant payday loans can be, here is a breakdown of a credit card and payday loan comparison in Singapore. Credit card loans, which are known for their high interest rates, can charge 25% per annum, while payday loans have an average rate of 24% for just two weeks. Unfortunately, the luxury of getting fast payday loans online comes with a high price. If you do choose to opt for an emergency payday loan from direct lenders, remember that your loan would be lower than your monthly income and you should pay off your loan in full once you have received your pay for that month. Forgoing just one month of repayment can be very damaging to your wallet if the charges snowball into exorbitant amounts.
Should You Get a Payday Loan: Pros vs Cons
Even if you’ve found the best payday loan in Singapore with an affordable interest rate, you should weigh out the pros and cons before plunging into it. A major upside is that compared to payday loans in Singapore, other loans require a good credit history where your past loan applications and debt history will be assessed. Payday loans are lenient in credit scores and will offer loans to those with a bad credit history. To be eligible for a payday loan in Singapore, all you need is to be employed at a company for at least a year and have a stable monthly income.
A huge con is the high interest rates, as shown in the payday loan comparison in Singapore when set side by side with a credit card loan. These charges have to be taken into consideration in contrast to your monthly income as loaning more than you can manage can be very detrimental. Payday loans should only be considered for those with a low credit score in emergency situations and a modest income that can pay off the debt.
What Are the Other Alternatives?
A payday loan can be quite daunting if not well-planned, but there are other alternative loans that can offer a good sum for a better price. A great alternative will be personal loans, which are offered by banks and licensed moneylenders. Banks usually offer personal loans to those with a minimum annual income of at least $20,000 while moneylenders will offer loans to those with a yearly income of less than $10,000 but at a slightly higher interest rate. Banks will have to do routine background checks before releasing the funds but licensed moneylender do not check credit scores for unsecured personal loans which means you can receive your loan in a day.
While payday loans can supply urgent funds for emergency situations, sometimes the high charges are redundant if you are eligible for other loans such as an unsecured personal loan. Discern your financial situation and circumstances carefully before deciding if a payday loan is essential or unnecessary.