Payday personal loans are known by many names, which include payroll loans, salary loans, short term loans, small dollar loans, cash advance loans etc. The term ‘cash advance’ is rarely used to describe these loan products as it is mainly associated with withdrawing cash with the help of a credit card. However, the other terms such as payroll loan, salary loan and so loan are frequently used for describing these financial products that are mainly offered by moneylenders and private financial companies. In countries across the planet, banks and reputed financial institutions usually do not offer payday loans as they are heavily regulated.
The total amount earned by an individual may not be enough to pay off the bills at the end of the month. Hence, people have to take loans from financial institutions, in order to get the money they need. When we approach financial institutions for loans, we need to have a good credit history or else they will not approve the loans. Unfortunately, many people do not have favourable credit history and the only option left for them is to opt for these payday loans.
These days, the payday personal loans or the loans for bad credit are very helpful for those people who have a bad credit history, and are in need of quick money. Unlike regular loans, the approval process for these bad credit loans is very simple and the time taken to approve them is quite short as well. After applying for payday loans, it does not take more than a day for the applicant to get the money.
If you have a good credit history and are not in need of urgent money, then you can certainly apply for regular loans at any of the banks. However, even if you have a good credit history and are in need of fast cash, within a day or two, then you can opt for these payday loans as the approval process is faster unlike the regular loans. However, you should be aware of all the risks associated with such a loan so that you will have a fair idea of your total cost of borrowing and also how it can affect your overall credit history.
A payday loan is an unsecured instrument of credit that is offered by a lender to a borrower on a short term basis and the borrower needs to pay off the borrowed amount on his or her next payday i.e. the day he or she gets paid her salary. Hence, a payday loan is also commonly known as a salary loan. In order to be eligible for such a loan, you need to be a salaried employee and should be able to provide your bank statements and salary slips for verification when you apply for the loan. Such an instrument of finance is usually the last resort of people who have bad credit and cannot obtain a personal loan or any other form of credit from banks and other financial institutions.
Instant payday loans or same day loans are availed when a person is facing some kind of financial emergency and needs a small amount of money immediately. These payday loans are labelled as instant because the application is processed immediately and you get the money transferred into your account within 24 hours. You will get the option of applying for the loan online. All you need to do is fill out the online application with your account information and personal information such as your age, monthly income etc. You will also need to submit your monthly bank statements and a copy of your last pay check. These documents can be scanned and loaded immediately, although some lenders may require these documents to be faxed.
These short term loans can offer you with instant cash. These loans are repaid on the next payday with interest. Once you apply online for the loan in a few hours they are approved and by the next business day you will receive your funds. The loan amount is transferred directly to the bank account after online verification. The providers of payday loans do not make any credit check so even people with bad credit can apply for these loans. With the advent of the Internet, now you can get a decent amount of money through payday loans from the comfort of your home by applying for them online. The amount can be used for any purpose. The interest charges are usually between $15 and $30 for every $100 borrowed.
There are many lenders that will not require you to present your salary slips or documents for evaluation. This reduces the processing time by more than half and you will not need to put a lot of effort in applying for the loan. However, such lenders are more likely to charge you a higher amount of interest and other fees for the amount that you borrow. Thus, it can be a risky proposition to borrow money from such a lender. However, if you are in urgent need of cash and are sure that there is no other means available to you to avail the required amount soon, you can apply for a payday loan with such a lender.
They offer instant cash - They can be the ideal financial tool to meet your financial needs in times of an emergency. When you apply for any other type of loan or when you approach an individual to borrow money, you may not be able to get the required money on time. Hence, it might become difficult for you to deal with your financial situation during an emergency. Hence, you can apply for such a loan and get access to cash within no time so that you can deal with your financial emergency.
They can help you to take care of all kinds of financial emergencies - No matter what your monetary need is - emergency hospital bills, mounting utility bills, maintenance bills vehicle unexpected bills or pending credit card bills, you can apply for a payday loan and get the required financial assistance. Thus, all of your emergency financial needs can be addressed with such a loan and you will not have to face legal troubles or any other problems that might usually arise when you are unable to meet your monetary responsibilities.
The application process is simple - The process of applying for a payday loan is quite simple and in most cases you will need be required to provide a lot of documents along with your application form. Now with readily available online payday loans, you can get instant cash without leaving your home. You will not have to spend a lot of time on travelling to a bank and then applying for the personal loan that they offer.
There are no credit check done – When you apply for a payday loan, the lender will not conduct any credit check. Thus, people with bad credit or people who have filed for bankruptcy can also apply for such loans and their application can be approved as well. When people apply for any regular loan a credit check is conducted by the lender and it affects the credit history of the borrower. However, such a check is not conducted in case of payday loans and so they do not directly affect the credit history of the lender.
You will not be required to offer any collateral – The lender will not ask you to offer any type of collateral security for the loan. Thus, you will not have to pledge your house, car or any other valuable to borrow money as the loan offered will be unsecured. Moreover, even if you fail to make the payments on time the lender will not be able to take possession of any of your financial asset.
Payday personal loans provide very short term loans of small amount. You can get the maximum of $1500 for a period of 14 to 20 days. The loan must be repaid within 2 to 3 weeks from the day of application. You should make sure to make the payment at maturity or interest charges would be doubled. In addition to being cash loans that are widely and easily available, payday cash advances have many other advantages. Although the loans are very popular, but they also have some disadvantages.
The interest charges are quite high compared to traditional loans that make these loans quite expensive. If you cannot refund the full amount at maturity, interest charges get almost doubled. So if you need a larger loan or if you are unsure of returning the payday cash advances on time, these loans are not meant for you. The interest is also applied on the loan amount very differently and in such a manner that you have to pay a lot more than you borrow. Hence, such loans can increase your financial burden even further.
Sometimes the loan provider might provide such terms and conditions that are very confusing and you might not be able to understand them. Thus, you can end up paying a lot in terms of borrowing costs. In many cases the borrowers have ended up paying a lot more than they have borrowed and their total cost of borrowing have been a staggering 200 to 300 percent. When the cost of borrowing is so high, people mind it difficult to cope with their payments and in the process they end up having a negative effect on their credit history.
Despite the fact that the lender will not check your credit score, you will still end up hurting your credit history by availing such loans. The amount of debt that you will accumulate in a short period of time will be very high and you might not be able to pay off the due amount. Eventually, your debts will reflect in your credit history and your credit score will be affected. Hence, you might find it very difficult to avail any more credit in the future.
When you are faced with tough financial situations, you often find it hard to take care of your expenses. The money that you earn may not be enough to meet your expenses and pay for groceries, utility bills, gas etc. you might try to borrow money from friends and family but even that might not help if the amount needed is a bit high. Thus, the next available alternative is to take financial assistance from a bank.
However, if you are someone with bad credit, you may not even have that option. In such a scenario, you might want to opt for a payday personal loan as it might be one of your only ways to avail the necessary amount of money that will help you in dealing with your financial emergency. If you do end up availing a payday loan, make sure that you have a fair idea of the terms and conditions provided in the loan agreement. Ask the lender to give you a clear picture of the amount that you can borrow, the rate of interest applied on the amount and the number of days that you will be provided with to pay off the borrowed amount.
Try to understand the amount of interest and other fees that you are most likely to pay in case you do not make the payments on time. Some of the lenders even charge additional fees that are not clearly mentioned on the loan agreement. Look out for such fees and always borrow from a lender that is licensed and has a good reputation with the customers. You should not have to get into a deeper and more severe financial crisis just to pay off the amount that you have borrowed through payday loans. Make sure that you take the help of a financial advisor if you are unsure of which lender you should opt for.
A lot of time many of the people who avail such loans end up paying 100 to 200 percent of the amount that they borrow. This happens mainly because the borrowers want to extend the period of the loan and they do not make an attempt to pay off the loan amount on their next pay day. When the amount is not paid in full by the next pay day or by the due date given by the lender, the interest charged becomes double. If such a situation arises and then you make payments for the loan, you are simply taking care of the fees and do not contribute in any way to the principal amount.
For example, if the borrowed amount is $1,000 and the interest and other fees charges add up to make the total owed amount to $1,200, a payment of $150 will be applied mainly to the fees and charges and very little amount will be deducted from the $1,000 principal loan amount. Hence, the interest and fees charged next month will still be very high and so you should make an effort to pay off the full amount as soon as possible.
As a borrower, you alone can take care of your financial interests when it comes to availing instant credit in the form of payday loans. Consumer protection and government regulation are in short supply when it comes to payday loans because the rules are set mostly by the private financial companies and moneylenders. Therefore, it is important that you consider all the data and the contractual obligations in detail so you can avoid meeting with a financial disaster. Remember, it only takes one wrong step in your part to slip into the quagmire of large debts.
Even though there are many unlicensed lenders in Singapore that offer payday loans, make sure that you opt for a loan only with a company that has been licensed by the Monetary Authority of Singapore (MAS). Such lenders will not acts like loan sharks and will not indulge in usury or taking advantage of borrowers in dire needs. They are most likely to follow the strict guidelines laid down by the MAS and so you can be assured that the lenders will not indulge in any unlawful or forceful means to recover their money. You can take the help of existing laws and seek legal counsel if your feel that the company has not adhered to these guidelines laid down by MAS.
You can contact the MAS to get a list of licensed moneylenders operating in Singapore before applying for a payday loan. By doing so, you can be assured that you are only approaching a licensed lender. Finally, you should know that applying for such a loan should ideally be your last resort and you should try all other means such as apply for a personal loan or a secured loan from a bank or financial institution before you decide to apply for a payday loan to meet your financial needs.