Since financial emergencies can be inevitable, you need some help to get through these troubles. Payday loans may be helpful when you need some extra cash urgently.
A payday loan can offer you the respite you seek with tailor-made plans to meet your emergency expenses. The loan has a low cost, and you can get approval in a minimal time. The primary purpose of this loan is to keep you afloat and meet your financial requirements until you receive your monthly paycheck.
Here is everything you’d want to understand before applying for it.
What Are Payday Loans?
You can understand payday loan as short-term cash loans that use your cheque as security. You will write the cheque to the lender for the amount borrowed and the charges applicable for the loan. The lender will hold this check until your next payday, when the entire sum will be paid off as a lump sum.
Sometimes, borrowers are allowed to redeem the check and repay the loan with cash. In Singapore, a payday loan is allowed for Singaporeans aged 18 years or above, earning a minimum income of $1500 per month. If you are a foreigner, the monthly income should be $2000 to apply for this loan.
What Should You Prepare When Applying for Payday Loans?
Firstly, these loans are usually unsecured and need no collateral. Since the amount is small in most cases, you can easily repay your debt in a month.
When applying for payday loans with a private lender, you need to submit a few essential documents. They include your identity card, residence proof, employment proof, and SingPass for login into the IRAS website.
Foreigners may be required to present additional documents like their passport, income proof, and work permit to apply for this loan.
How Can Payday Loans Help?
With payday loans, it is easy to meet your emergency fund requirements without paying exorbitant interest rates. Your loan will usually be disbursed as soon as you sign the contract with the lender. You can use the fund to cover any sudden or unexpected expenses. This loan is especially suitable for employed individuals who need some quick cash before receiving their monthly salary.
You do not need a stellar credit record to apply for payday loans. Even an individual with a bad credit history can apply. Unlike a personal loan, you do not have to submit collateral security to the lending institution.
Another advantage is the fixed maximum interest rate a lender can charge when giving this loan. The Ministry of Law in Singapore has set a maximum interest rate of 4% per month for moneylenders, covering all secured and unsecured loans.
The lenders also need to abide by the laws to charge legal fees on the loan amount. However, you should not take this loan to pay off any existing debt.
How Do Payday Loans Work?
You can apply for payday loans through a physical branch of the lender in your city or via their website. The government has specified the maximum amount you can borrow under this category. Hence, follow these guidelines and choose a licensed lender for your loan. Compare loan options from different providers to choose the lowest interest rate and flexible repayment terms.
Deposit all the required documents with the moneylender and wait for the approval. It shouldn’t take more than a few hours to get the loan. Some trustworthy moneylenders may ensure cash disbursement within an hour if you meet all eligibility criteria.
After the approval, you will receive cash, or the lender will deposit the money into your bank account. Check your bank account once to confirm if you received the correct amount.
Most importantly, never default on this loan if you want to avoid an additional debt burden.
How to Choose the Right Lender
To avoid high interest rates and hidden charges, apply for a payday loan with an approved moneylender in Singapore. Before applying, check the lender’s reputation and experience in the field.
Choose a company with legitimate reviews and a registered physical office in Singapore. Also, don’t forget to check the Registry of Moneylenders to confirm if the lender is licensed by the government. It also ensures that the lender follows the legal regulations set by the Ministry to provide fair credit to its customers.
Lastly, ensure that the application process is hassle-free, private, and secure. The lender should not share your personal information with any third party. With a licensed lender and clear repayment terms, you can be assured of meeting your financial troubles with utmost safety and confidentiality.