People who need to take out loans from a legal money lender usually need to take some time to decide what type of loan they can take out.
Most of the time, they settle for either a personal loan or a payday loan.
Both personal loans and payday loans tend to be common loan options. They aren’t, however, the best choice for everyone.
The Difference Between A Personal Loan and Payday Loan
Depending on your financial situation, you might need either a unsecured payday loan or an unsecured personal loan. In order to help you make a choice between either loan, the following information depicts both types of loans in more detail.
A payday loan is best known as a short term expensive loan that allows people to get money they need until their next paycheck.
The licensed lenders usually ask potential borrowers about their job status and if they have other sources of income when applying for a Singapore payday loan. In order to take out the loan, borrowers also have to provide a post-dated check to cover the loan amount, in addition to a finance fee added on by the lender.
The loan payment is taken out of the borrower’s account once they receive their next paycheck.
Borrowers that don’t pay back their loan on time are subject to additional fees and other financial charges.
Borrowers who take out Singapore payday loan usually don’t have to undergo a credit check. This makes payday loans popular among people with low or bad credit.
Payday loans are considered rather convenient, since borrowers can get cash as soon as they’re approved for the loan. On the other hand, this type of loan tends to add up fast and may trap people who otherwise don’t know how to get out of that type of debt.
Personal loans tend to be a little harder to obtain than payday loans, especially if you have low or bad credit. These loans tend to have a fixed interest rate and repayment period. A legal money lender will also take the time to look into a potential borrower’s credit before granting the loan to them. In addition, personal loan queries can also lower the borrower’s credit score.
Credit unions are considered good places to shop for personal loans.
They tend to have more lax lending requirements, giving people more opportunities to take out an unsecured personal loan. Potential borrowers who have low or bad credit may be able to take out a short term unsecured personal loan under a credit union.
Online lenders also offer short term personal loans to low or bad credit borrowers—but be careful. These lenders are almost always predatory lenders, who may trap unsuspecting borrowers into terms conditions that they can’t break. Due to the presence of predatory lenders, it’s suggested to always apply for a few loans with lenders that you already trust, rather than apply at any lender who may be offering a personal loan.
Personal loans allow potential borrowers to receive money when they need it. While it’s not always the best choice of a loan, it’s still recommended for people who have the credentials to qualify.