Lenders offering a payday loan in Singapore are in the business of making a profit by helping others cover expenses between paychecks. When something needs to be paid for right away and the paycheck is simply going to arrive too late, these lenders will extend short term loans to allow consumers to make ends meet. The catch is that the lender makes a profit by charging interest on the loan. This is the same that all banks do when extending loans, but the terms are different.
Payday loans are short term loans, so they have to be paid back with interest in a short period of time. Sometimes the length of the loan can be set according to the customer’s needs, but some lenders may have predetermined terms that must be agreed to by every customer. In most cases, there is no penalty for paying the loan off early, so customers can agree to dates beyond their actual payday and pay the loan off as soon as they receive the money. Some loans are to be repaid within a week or two weeks, while others may be extended out to three or four weeks.
Those interested in applying for a payday loan in Singapore should know the basic rules that typically go along with a payday loan, as well as the specific rules related to a chosen lender. The basic rules to be learned are as follows:
1. The interest rate for a payday loan may be a bit higher than the rates given at large banks and other lenders for longer term loans. This is understandable given the short terms offered with these loans and the fact that they are typically extended without credit checks and without reporting to the credit bureaus. Many people use the pay day loan system when they do not have the credit to get a loan from other lenders. Many big banks will not extend small short term loans either, so the payday loan system is completely different than the banks when it comes to interest rate and terms of agreement.
2. In many cases, the money is electronically transferred to your bank account, and will then be automatically taken back out of your bank account when it is time to repay the loan. If this is the case with your loan, you have to make sure that the money is in your account at the time you have agreed to repay the loan. If you overdraw your account, you will be facing bank fees on top of the interest for the loan.
3. You may not have to go through a credit check or prove your income in order to take out a payday loan in Singapore, but you could take hit on your credit if you do not repay your loan and they have to chase you for the money. Do the right thing and make sure you can repay the loan before you take it out.
The rules for a pay day loan in Singapore are not complicated. You apply for the loan and the money goes into your account. On a specified date you repay the loan. There is nothing more to it!