Personal loan in Singapore are not the same as payday loan, which is a common mistake that most people make. Even people who should know better seem to use the terms interchangeably. With the high cost of living in Singapore, short-term loan products designed to help meet emergencies and other immediate needs are much in demand. However, understanding these two types of loans will assist you in deciding which is the most appropriate for your needs. Both loans are available only to people who are at least twenty-one.
Payday Loan vs. Personal Loan
A payday loan is a short-term loan that is intended to be paid back in full at the next payday. It is an unsecured loan that does not require you to produce much documentation to get a loan, and is easier to get approval for. Usually, having an active bank account is enough to get you approved for a payday loan as well as providing proof of employment. These loans are generally offered by independent lenders such as moneylenders rather than banks.
Interest on a payday loan is computed as a percentage of the loan amount. For example, if you borrow $1,000, you may pay back around $100 in interest, or ten percent. The amount you can borrow is limited and depends on how much your income is.
A personal loan, on the other hand, is a traditional loan product that requires the same documentation as a regular bank loan. The documents that you may be required to produce include proof of employment, pay slips for several consecutive months or tax assessments for several years if you are self-employed, and proof of residence. The loan amount you can get is larger than with payday loans and is payable on an installment basis over a certain term, such as several months.
Which Loan is Best?
A payday loan is the best choice for people who have a quick need for money which is such a big amount. For example, if your car breaks down and you need to have it fixed, a payday loan allows you to have enough to live on until your next payday.
On the other hand, if you are planning a big purchase such as a car, personal loans in Singapore is the best choice since they allow you to pay off the debt over a certain period of time, which can make it easier to fit into your budget. In addition, personal loans may allow you more flexibility in repayment terms, since the lender can give you the option to pay off the loan on a monthly or bi-weekly basis, for example.
Getting the Best Personal Loan
If you are looking for personal loans, make sure that you compare terms from several lenders, so that you can find the best deal. In particular, look at interest rates and repayment plans, as well as how much you can borrow. Comparison shopping among the different personal loans in Singapore providers will save you money in the long run by ensuring that you get the best terms for your loan.