Finding yourself in the middle of some financial emergency is not an inconceivable thing. More often than not, such situations do arise where one has to take a loan to cater to their professional or personal errands.
Opting for a loan seems highly feasible when you do not have sufficient savings or investments.
There are various places where one can apply for a loan in Singapore, including banks, financial institutions, and licensed money lenders. Multiple types of loans are also available through various financial sources. However, one needs to be very cautious while choosing which kind of loan they select to meet their financial needs. A different set of rules and procedures for repayment are involved with each of the distinct types of loans. As a borrower, to apprise yourself of such varied rules is extremely important to stay away from the repercussions that one may face in case of failure to repay their loan.
Personal loans and payday loans stand among the most widely used forms of borrowing in the market. A comparative analysis of one of the two most common loans available in Singapore is provided for you here to help you make an informed decision.
Personal loan & Payday loan –
An individual borrows money from a bank or financial institution in a personal loan and pays the amount back in fixed installments over a definite period. However, a minimum income is required to be maintained, and the bank would check the credit history of the person applying for a personal loan.
Whereas in the case of a payday loan, it provides you with money that you require until you receive your next paycheck and is known as a short-term, high-cost loan. The compensation one receives is used to clear the debt. Thus, this is just a case of pulling forward the paycheck through some days. But this is done at the cost of very high-interest rates. Payday loans are easier to get as they get easily sanctioned because the banks or financial institutions lending the sum don’t usually check the borrower’s credit score. They only require some proof showing that the individual would receive their paycheck within the pre-determined tenure. Another crucial aspect of a payday loan is that it should necessarily be lower than the income receivable through your paycheck.
Hence, we can’t solely rely on payday loans for huge financial requisites.
Pros and Cons of Payday Loans
● The money lenders, banks, or other financial institutions whose help you might have received a payday loan won’t check your credit history. Thus, you can easily avail of a loan despite some unpleasant history with credit and debit cards. They need proof to corroborate that the person applying for a loan would receive his/her paycheck within the specified time for repayment.
● Moneylenders in Singapore charge exorbitantly high interest rates for a payday loan. Interest rates as high as twenty-four percent per two weeks can be levied upon a payday loan, which is way higher than what is charged on a personal loan.
● If the person fails to pay back the payday loan within time, the amount will mount to become so huge that they might not be able to pay it back ever again, owing to the exorbitantly high interest rates.
Personal loans: Pros and Cons
How do personal loans work?
A personal loan is when a lender gives some lump sum money to the borrower as per his requirements. The lender then has to repay the loan with interest in fixed amounts in the decided period.
The collateral system doesn’t work in personal loans. It means that they are typically unsecured. Hence to determine the eligibility and APRs, the lenders rely on the debt to income ratio and your credit score.
However, some lenders only offer secured loans. Such loans are backed on any precious asset owned by you, like your home, car, or plot of land. If you are a borrower with a lower credit score, secured personal loans may be a viable option for you as they typically come with lower APRs than unsecured personal loans. The only pitfall is the risk of losing the asset in case of default in repayment.
Embrace the numerous benefits of a personal loan
Many websites are offering online personal loans that are easy to repay in fixed amounts. Your monthly repayment will remain equal, so you’ll always be able to budget for how much you owe.
The biggest plus point is that they do not require any collateral. Especially in online unsecured personal loans, you don’t have to risk your asset to get your loan sanctioned.
Personal loans can be useful in many ways. You can use a personal loan to finance virtually anything, including:
Credit card refinancing, Common uses for a personal loan, Debt consolidation, Business expenses, Home improvements, Wedding expenses, Car financing, educational expenses, medical bills, large investments and purchases, moving expenses, to name a few.
The perfect choice for getting personal loans- SU Credit
Singapore is an expensive country, and saving money can be quite difficult. Amid inflation in prices and rising living costs, more often than not, you’ll find yourself without sufficient savings to back you in case of any financial emergency. However, financial assistance such as personal loans can solve this problem for you. A payday loan can prove to be an extremely egregious form of capital, especially in Singapore. The options of online personal loans are, without a doubt, the most reliable choice to make which is highlighted in the reasons mentioned above.
Here at SU Credit Pte Ltd, our main aim is to provide you with all sorts of financial assistance so that you can March towards your goals without being hindered by financial barriers. We offer our clients top-grade service and hassle-free loans. With comparatively lower APRs and easy installments for repayments, our packages are perfectly tailored to ensure that all your needs are met at your convenience and comfort. So what are you waiting for? Apply for personal loans with SU Credit today and say bye-bye to financial worries?