Typically, payday loans have higher interest rates than other types of loans due to being short-term loans. This has led many to misunderstand its purpose and, as a result, gave rise to a slew of misconceptions that make it seem less favourable compared to other loan types. In truth, there are plenty of reasons to take up a payday loan, but let us first clear the air around it by debunking five of its most common misconceptions to date.
1. It is challenging to repay payday loans once they are due
It may seem like it at first, but repaying a payday loan when it is due does not necessarily have to be complicated. When applying for an easy loan in Singapore, such as a payday loan, an essential thing you can consider prioritising is to reserve the amount you can afford to repay on your next payday. This means spending only on the absolute necessities until then – the rest should ideally go towards paying what you owe.
Should borrowers not overextend financially and plan their funds accordingly, it can be relatively easy to come up with the cash for the payoff. Better yet, they can even set up an automatic payment process in their bank account to ensure the payment is made as soon as possible.
2. There are restrictions on what the loan can be spent on
Once approved for a payday loan, the loan amount gets deposited directly into your bank account. As such, you are free to do with it as you please, be it to pay off essential bills or fund an emergency. The only caveat here is that one must avoid all sorts of risky financial behaviour. If borrowers fail to repay the loan once it is due – and with its high-interest rate on the line – the resulting fees will likely snowball and cause the debt to be more unmanageable.
3. Proof of income or employment is not necessary
Contrary to the misconception, virtually all potential borrowers seeking to get approved for a payday loan would need proof of a steady source of income (or a verifiable income, at the very least) and an active checking account. Of course, some licensed moneylenders strictly require loan applicants to hold down jobs or other reliable income streams, but this is not always the case.
4. You need a good credit score to qualify
Although some licensed moneylenders have stringent requirements regarding the borrower’s income and credit score, this only applies to a select minority. Most lending institutions will provide payday loans no matter the borrower’s financial situation, including applicants with poor or average credit scores. With that said, however, it is crucial to keep in mind that bad credit may result in higher interest compared to having a score that is, at the very least, in the 700s.
5. Payday loans are only good for funding ‘extras’
It is not unheard of for some individuals to take out payday loans simply to finance their lavish yet unsustainable lifestyles. But in truth, there are countless people out there who need just a bit of extra cash to stay financially afloat yet have no access to conventional lines of credit or are simply poor at managing them responsibly. Hence, they turn to short-term loans like payday loans instead.
Payday loans tend to be seen in an unfavourable light by those who mismanaged their payday loan, did not do enough research on them, or simply did both. While one cannot discount the fact that there may be instances where you are left with no other option but to get a payday loan, there should be no shame or embarrassment in doing so. By being a responsible borrower, any loan can help improve your life for the better.
If you need to take out a payday loan without delay, look no further than Orange Credit! We provide fast loan approval in Singapore for many of our loan services, such as payday loans, personal loans, business loans, and more. With repayment schemes that can be tailor-made to your needs and affordable interest rates to boot, we always look out for the best interests of our clients and provide the best loan deals in all of Singapore.