Make the RIGHT decision on choosing Payday Loan or Principal Reducing Loan
There are no two-ways about this. You WILL need a loan at one point in your life! This will further be expounded especially at times like this when the market is so volatile and tough. You need to be extra careful when you deal with this as it might not always involve the banks. In fact, a lot of money lenders offer quick cash loans as they are easier and faster to process.
Cash needed URGENTLY!
It could be a time when you are short of cash to maintain your business operations. It could be an emergency and you really need some additional funds. It could well be a short and last-minute vacation you decided to go and need some money. For whatever reasons, you will find that banks have all types of loans available. In Singapore, you can choose between the 2 most popular ones:
- Payday Loan
- Principal Reducing Loan
In fact, these loans are available from money lenders (legitimate ones) and what makes them really attractive is that you can get your money quite quickly. So, when it is quick cash you need, these 2 loans should come into mind. But which one should you choose? Let us educate you!
Payday Loan – Suitable for the salaried employee
As the name implies, the Payday Loan is catered for you if you are a salaried employee. In other words, you earn a regular salary where you have a standard amount at a stipulated date each month. The mechanics is simple. You are eligible for this loan only (and only) if you earn a monthly salary. You can borrow a sum of money and your part of the bargain is that you will pay back the loan on the salary day. Hence, you must have evidence that you have an income. The amount you earn will be the yardstick to gauge how much you are eligible to borrow. Once the loan is approved, you will have to repay back on the day you receive your salary.
In most cases, this type of loan will be issued in 30-day cycles. You will be charged interest based on the number of days that have been pre-agreed. Once you have all the documentation and evidence of employment in place, you should be able to get the cash instantly (or within hours).
Principal Reducing Loan – Perfect for longer-term borrowing
Unlike Payday Loans, this type of loan is offered to both salaried employees or anyone else who has some form of income (with proof of course!). How this works is that the lender will look into your credit history and financial health to gauge how much you can borrow and your eligibility as well. In other words, the lender pretty much have the last say as to how much you can borrow and at what interest rate.
Hence, your credit history will play an important part. If you have some default payments, then you might have difficulty getting the loan approved. However, some money lenders might be willing to borrow you the cash with some form of collateral or perhaps a higher interest rate. You will be given the option to repay the loan within a few months as well. as such, you can stretch your commitment further taking into consideration other expenses that you might have.
The BIG Question! Which is your ideal option?
The most important issue here is how well can you pay back the loan once you have taken it. The rule of thumb here is that, if you need a large amount, then the Principal Reducing Loan would be your best option as it gives you a longer term in repayment. On the other hand, if you require quick cash (which is not too large an amount), then the Payday Loan will be your perfect choice. At the end of the day, you do not want to enter into a financial commitment which might further burden your monthly payments. The Principal Reducing Loan might have lower interest rates while the Payday Loan would save you a lot more if you payback in a shorter time.