When Should You Look for Payday Loans in Singapore?
Posted by Sofia Levine
from the Finance category at
22 Apr 2024 06:41:58 am.
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There are many different situations when you may need to borrow money from a licensed money lender. So, it’s vital to understand the type of loan that you need, how to find the best option available in SG, and what preparations you need to make. This also applies to payday loans, and it's crucial to follow the advice mentioned in this article to get the best deal.
First, you need to know what and when you should look for this type of loan, but it’s critical to also understand the advantages and disadvantages it comes with. You will also find in this article the best way to find a reliable lender in Singapore. However, you must remember that there are some alternatives that may fit your needs and requirements better under some specific circumstances, and you should keep this type of loan as the last solution.
The Basics of Payday Loans in Singapore
The first thing you should know about payday loans in Singapore is that they are designed for short-term repayment periods. They also have a very low ceiling, so you won’t be able to borrow too much money through them. For example, many of the options available are due on your next payday. As a result, the borrowing limit will also be minimal to ensure you can make the repayment from your salary.
Because this type of loan is mainly targeted for emergencies, there are many scams or unscrupulous lenders out there. For this reason, the Ministry of Law regulates them, and you can find a list with all the licensed options you can choose from without worrying. So, if you already have a lender in mind, you should first check if it’s licensed before you consider using its services further.
Because the borrowed sum is generally low and the repayment period is short, the interest rates of this type of loan tend to be higher when compared with most other types of loans. For example, you may have to pay a 4% interest rate per month, and you may also have to pay different fees. So, you should only take such loans when you can pay them as quickly as possible.
3 Types of Situations When You Might Need Payday Loans
Life is not always predictable. There will always be unexpected situations that arise and surprise people. Sometimes, such a situation may come with expenses that you may not have the funds for. The most common examples are car repairs and medical bills, which may not require a lot of money in Singapore but could overburden your financial situation without the help of payday loans.
You can also encounter situations that you may have expected but you still need some extra money for. You may need to rent a new home in SG one day, and you may not have enough for the required deposit. Or, you used a lot more electricity or water for whatever reason, and you can’t afford that this month. So, even if you knew about these expenses beforehand, you may still need to use this type of loan to cover them.
Although rarely, this type of loan can also be used for reasons that are not considered emergencies. If you have a low credit score and you can’t qualify for a traditional loan, then this may be your only option. However, in general, there are other alternatives that are a much better choice and you only need to find a reliable licensed lender to access them.
Pros and Cons of Getting a Loan from a Licensed Money Lender in SG
Now that you have an idea about what a payday loan is and when you may need it, it’s essential that you fully understand the pros and cons that come with it. So, you should check the information below before you start looking for a money lender in SG.
Pros:
- Easy and quick. You won’t need a lot of documentation, and the approval process will generally take a day, maximum of two, under special circumstances.
- Accessible and easy to repay. Almost everyone has access to such loans, and the low borrowing limit makes them easy to repay.
- Offer immediate peace of mind. You can solve your emergency quickly and have your peace of mind restored.
- High-interest rates and fees. Even with the 4% regulated limit and high fees, the interest rates and your total cost are still many times higher than the most common loan options.
- It can lead to debt cycles. If you are not capable of repaying it quickly, the high rates and costs may increase the loan massively in a short year or two.
- Many scams associated with them. You will find many ads and promotions made for such loans, and many of them are scams or unregulated loans.
There are two different methods that you can use to find the best money lender for you. First, you can spend a lot of time checking every option you see on the Ministry of Law’s licensed list. Second, you can use Google to find the top options available and check if they are licensed afterward.
If you choose the first method, then you will need to spend a lot of time trying to find the best rates and fees. On the other hand, using Google will generally help you find the top lenders that provide the best rates much faster. You only need to check the license after you find the best possible rates.
Regardless of the method you choose, it’s vital that you check the reputations and reviews of all the lenders you find. This will give you a lot of useful information that will help you make the correct decision that will cost you the least of time and money. You will already pay high rates, so why lose more resources than necessary?
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