It’s beginning of the last week of the month, and you find yourself facing a temporary financial emergency. Out of nowhere, an expense of $600 has come up while you have only $400 in your current account.

From where can you get the remaining $200?

You can ask your family to lend you some money, but asking them is embarrassing. After all, you are an adult now and likely hold a job.

Well, there’s one easy solution. Take a payday loan from a licensed money lender.

As the name suggests, a payday loan is taken against the next paycheck and is a short-term loan. Of course, you can extend the loan, but that’s never advisable.

That will be due to how payday loans typically come with a high-interest rate. So if you extend your loan, you would end up paying a lot of money above the initial amount. Moreover, extending a short-term loan indicates a lack of financial indiscipline, which is a big problem.

Remember, short-term loans are advantageous if you take them only when necessary. If you are taking payday loans too frequently or are unable to keep up with repayment, it means you are not in control of your finances.

In such a case, learning budgeting and financial planning is a must because otherwise, you might find yourself falling into the debt trap. Getting out of a debt trap is a Herculean task, to say the least.

Another thing you must remember is that payday loans are not the answer to a long-term financial problem. If you are under a massive debt and are unable to bring things on track despite your best efforts, it wouldn’t be a bad idea to go through financial counselling.

Now let’s see eligibility, advantages, and interest rate of payday loans.

Payday Loan Eligibility

There’s only one primary criterion for a payday loan: you must be employed. While some lenders might check the borrower’s credit history, many do not. As long as you can submit a proof of your employment, you are not likely to have any trouble getting a payday loan.

Payday loan advantages

The main benefit of a payday loan is that it allows you to meet a temporary financial emergency. When you need money quickly, you can’t approach a bank or credit card company, because they take a long time to run a background check and process the loan application. On the other hand, you can get funds the same day or the next day when you take a payday loan from a licensed money lender.

The other advantage is that it doesn’t have strict eligibility criteria. You can get a payday loan even when your credit history is below par.

The third key advantage of payday loan is a lack of paperwork. You don’t have to sign many papers or submit all kinds of documents to get a payday loan. Some companies even offer a payday loan online.

Payday loan interest rate

Different legal money lenders in Singapore might charge different interest rates. If possible, you should try to talk with several lenders before taking a loan. This approach will help you get the best possible deal.