14 Dec Pros and Cons of Getting A Pay Day Loan
There are times when emergencies arise, and we need money. In this case, a payday loan presents itself as a quick solution to our problem. However, there have been debates about the grounds for getting a payday loan.
This article will help you get a better understanding of what payday loan is along with its pros and cons.
What is a Pay Day Loan?
A payday loan is a small loan, also known as a quick fix or speedy cash. It helps aid people in times of monetary crisis to pay for their daily necessities before they get their next paycheque. Unlike other loans whereby people can take out a hefty sum and pay back years later, you can only loan a small amount for immediate expenses.
You must understand that this type of loan is not something you should apply as and when you feel like it. It is pertinent that you know all the pros and cons prior to committing to a loan.
Pros Of Pay Day Loans
Payday loans can help you out when emergencies or unexpected situations arise. So long as you understand the terms and conditions that come with the loan.
Here are some benefits of getting a payday loan:
1. Quick approvals and transfer of payday loans
Many people are drawn to payday loans due to its convenience, especially since some payday loans in Singapore allow people to get cash on the same day of their application.
Payday loan applications can be made online, at the comfort of your home. This eliminates the time spent travelling down to a moneylender and filling up the application on the spot. Making for an enticing prospect for people who are in dire need of cash. Especially when things are unpredictable, you will never know when you will need emergency cash. With this loan, you can loan money without a long waiting period.
2. It is an unsecured loan
When it comes to loans, one prime worry people have would be putting down collateral for a loan.
However, payday loans are unsecured, which means that you need not use your property or assets as collateral, unlike other loans. Hence, if you are unable to clear your debts, the lender cannot seize your property or asset consequently.
3. There are fewer requirements as compared to other loans
Payday loan is an easy option for many individuals as it requires fewer requirements. Unlike traditional loans where lenders need to verify your ability to pay back the loans, in addition to a longer processing period. With fewer requirements, this makes getting cash much more convenient and accessible to people.
Generally, these are the requirements when you apply for a payday loan:
- At least 21 years old and above
- Must be a Singaporean, Permanent Resident or a Work Permit Pass holder
- Have a regular job or other regular sources of income
4. Bad credit score is not an obstacle
Unlike traditional loans where you need a good credit score to get an approval, payday loans do not require your credit history. If you have a bad credit history or a low credit score, you can still acquire a payday loan.
However, do take note that payday loans won’t help you build your credit. At the same time, keep in mind that there is a high-interest rate. Thus, do pay back the amount you have taken as soon as possible. Hence, it is recommended to apply for your payday loan from a licensed moneylender in Singapore.
5. Amounts are adjustable
Another perk of a payday loan is that you don’t have to take out the maximum amount. Moneylenders have a variety of loans with different amounts you can loan out. For example, you need not loan $800 when you only need $400 – this lowers the possibility of late payments and risks of staying in debt.
Typically, payday loans range from $50 – $1000. However, there are a few moneylenders with higher capped maximum loan amounts that could go up to $2000. Thus, make sure to look into the terms and conditions of your moneylender if you require a higher loan amount.
Cons Of Pay Day Loans
Payday loans provide you with the opportunity to get fast cash for emergencies. However, if you’re not careful, you might end up having a larger sum of debt.
Payday loans can be too good to be true, and people take advantage of it. Where they spend the surplus money on non-essential items, causing them to be unable to pay the loan back when it’s due. Further damaging their financial state.
Here are some pointers to take note of when applying for a payday loan:
1. High-interest rates
There is a price that comes with convenience. Payday loans have much higher interest rates as compared to traditional loan rates. Some interest rates could go up to 100% depending on your moneylender. Hence, some people may find themselves in a position where they are unable to make the total payment when it’s due.
If the payday loan is not paid, the balance will be rolled over, essentially charging them more interest. Therefore, some might find it harder to pay back payday loans compared to a traditional loan, which could lead to a potential cycle of debt.
2. It is a temporary fix
Payday loan is only a temporary fix to your financial problem. It won’t help you get out of debt in the long run. Instead, you should use it wisely as a good short-term solution to an emergency. Always make sure that you are borrowing the right amount that you can afford to pay back. If you borrow more than what you need, it might become an additional burden to your debt.
3. Loans need to be paid back quickly
Aside from the high-interest rates, there is a time constraint when paying back your moneylender. You have limited timing to repay the loan before additional fees are added. Never overestimate your ability to pay back a loan, as this may result in unpaid debt with the balance being rolled over to the next month.
It is pivotal that you understand the fine print before committing to a payday loan. Ultimately, it is crucial for you to choose the right moneylender to obtain a payday loan.
Trust JD Credit For Your Pay Day Loan
JD Credit is a licensed moneylender in Singapore with many years of experience in the industry. We are committed to achieving excellence by providing the best information and the finest customer service. Our vision is to be a leader in the moneylending industry in Singapore. Contact us to apply for the best payday loan in Singapore today!