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Choosing Between Payday Loan Or Personal Loan

Choosing Between Payday Loan Or Personal Loan

Some Singaporeans may be having a hard time budgeting their salary to run from to till the next payday. If you are facing such an issue, you do not have to worry about this. Everyone has those moments where there is a need to deviate for some time from the strict budget. This can either be in order to cover emergency expenses or even to indulge ourselves with the best buys.

Some unexpected expenses could be for repairs, replacements or even medical assistance. When such moments come it is easy for someone to think that they have only limited options to choose from.

But then again you need to think of the most reliable and trusted partner as far as your financial needs are concerned. This would be your moneylender. Also look at the loan products they have they offer to help you during such challenging situations. Here you can have the choice of personal loans and payday loan.

However, at this point, the problem would be deciding on the better option of these two. You certainly know that these two loan types are useful in covering your short-term financial needs. These could be things like rent, electricity bill, as well as maintenance of medications.

Various licensed moneylenders will have different policies for their personal loans and payday loan offering. Even then, both of these loan types do have the same intention. This is to help you meet your urgent financial commitments.

Concerning Credit Report

Personal loans are normally unsecured the one thing that your moneylender has to do is make certain they, in the end, do not have bad debts is using your credit report. They closely look at your credit scores. Then they analyze whether you will still be able to repay your loans or not. On the flip side, you will have credit report check-free when getting the payday loans. The reason behind this is since the post-dated cheque is considered a sort of payment for the amount you will have taken out as a loan. When you are not ready to get hassled though having credit checks. You can then consider the payday loan option as it will best suit you.

Regarding Collateral

Often times as you are taking a Payday Loan, you will be required to provide your moneylender with a post-dated for the loan amount taken with an additional amount to cover financing fees. Your moneylender can then later simply convert this check to hard cash once your pay comes.

While you may not need collateral for personal loans, thus it makes it an unsecured loan. This means that your moneylender will not have control or access to your belongings. For this reason, personal loans tend to be quite attractive to many when compared to the payday loan option.

Concerning Your Occupation

A good factor to keep in mind when deciding between payday loans and personal loans is your occupation. For someone who is employed, you could consider going for the payday loan option. This way, all you will need to do is simply present your lender with the post-dated check to act as a collateral. In so doing you will not face the hassle of having your credit report checked.

On the other hand for someone who is an entrepreneur, considering the personal loan option may be the best fit for you. This is because you cannot provide the post-dated check from your employment.

For this reason, taking out a personal loan will help you cover your short-term financial needs. It can prove to be costly should you decide to take out a personal loan for long-term instead. Therefore, consider your ability to repay the loan with ease.

Repayment Period

Normally, the personal loans have longer repayment periods. These might range from several months to a year and at times 2 years. When compared to the repayment period for payday loans which is shorter and will start at around a week. This is when you consider that there are some payday loans which have a repayment period lasting for about 2 weeks. Additionally, the payday loan option lets debtors who are not able to repay it in full be able to choose.

With this option, it is possible for them to “renew” their payday loan after the end of each pay period. To do this, a borrower will need to put in a nominal payment on the loan. This will help in covering only part of interests accrued on their payday loan.

Therefore, the renewals help in extending this loan type. This will mean that a two-week loan could end up going for a few more months. This can sometimes even end up running for more than a year for you to be able to settle the payday loan in full. According to a research report done by the CFPB, it indicates that many borrowers can remain in such a loan cycle for a period of about 5 months.

In concluding, your financial situation will determine whether you will choose to use the personal loan or payday loan. Even then, bear in mind that when the loan you choose is not properly managed.

Both of these loan options might still lead to financial troubles. This is only when you end up holding a larger debt with your money lender than you can possibly pay for. When you are deciding on a loan type that will best suit your needs. You only will have one thing to keep in mind. This is to first find out all the information concerning the money lending services offered.

The other thing you need to know is the exact amount of your income that will let you get a loan. You certainly will not want to wind up with a huge loan that cannot be paid off using your income. By considering all the above-mentioned factors, you will be in a better position to choose the right loan option. A loan that will help you meet all your financial needs.