Find out which loans offer the best rates and learn how to utilise them correctly.,You’ve been there before. Something just happened that requires you to spend hundreds of dollars (if not thousands), but there’s not enough money in your bank account. To make matters even worse, your paycheck isn’t arriving for another two weeks. As we are approaching the holiday season willed with plenty of spending necessities for gifts and presents, you might feel even more pressure than usual to get hold of some cash now.,What can you do to get the money you need?
It may be tempting to consider getting a payday loan, but we want to warn you that it’s a seriously dangerous proposition. You may have heard many people say such things before about how dangerous a payday loan can be in Singapore, but we wanted to show you a concrete example to demonstrate just how damningly expensive it can be.,A payday loan is a very short-term, high-cost loan that gives you money that you need until you receive your next paycheck, as the name suggests.
Typically, your paycheck is used to pay off this loan so it’s a way of “pulling forward” your income by few weeks or days in exchange for high interest rate and fees.
It is a very easy loan to get because lenders usually don’t check your credit score, and only ask for proof of income to ensure that you will be getting paid soon. This also means that a payday loan will have to be smaller than your paycheck, so you should not count on it to provide a significant amount of money anytime you need it.,The short answer is an emphatic yes. There are a plenty of options for people who need money quickly other than payday loans, and they are also much cheaper than a payday loan.
Even if you need the money immediately within 24 hours, there are definitely more viable and less dangerous alternatives in Singapore.,A payday loan is on the other end of the spectrum because the lender doesn’t know anything about you other than your last paycheck. Therefore, it is highly recommended that you check out other more “specific” loans available in Singapore that are designed for your need.
If you need the money to pay your home renovation contractors, you can take out a renovation loan. If you need help paying for your tuition, you could take out a student loan from a bank at 4-5% interest rate.
These loans take longer to process, but they are definitely worth checking out.,If you need money as soon as possible, and are trying to choose between a payday loan and a personal loan, we would recommend you to go with a personal loan almost every single time. There are only a few rare occasions when a payday loan may make more sense than other options like personal loan. Below, we discuss advantages of a personal loan over a payday loan, and illustrate in a table a few examples of who may prefer.,First and foremost, personal loans are much cheaper than payday loans, especially if you have an annual income above S$30,000 (though some banks still grant you a personal loan if you earn S$20,000 or more per year).
A personal loan should cost you only 7% of annual interest at most, and banks in Singapore usually approve your loan within a day.
Hence, it’s a very cheap of getting cash fast.,Secondly, a personal loan in Singapore is very easy to manage because it can be repaid over a longer period of time. Each payment can be divided into equal smaller parts compared to a payday loan which can take your entire paycheck at once.
Not only that, the lender shows you exactly how much you have to pay every month to pay off your debt gradually over time.,Lastly, a personal loan can offer bigger sum of money than a payday loan.
The amount of personal loans you can get ranges from thousands to tens of thousands of dollars. So in case of a real emergency, a personal loan can be a much more dependable source of capital than trading your paycheck.,The only time that you might get a payday loan is when your income is below S$20,000 annually and you don’t have access to a credit card either. In these cases, there aren’t many places that will lend you money. However, even for these situations, a payday loan can only provide a few hundred to thousand dollars at a time because the lender won’t give you more money than your next paycheck.,If you're facing a financial emergency and have no other options, a payday loan could be your only way.
However, remember that your next paycheck will have to go directly to the lender, so you need to manage your finances closely so that you are able to live even without your next paycheck. With interest rates being as high as they are for these products, you don’t have much room for error.
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