A PAYDAY LOAN can be defined as a small amount of cash with a relatively high interest lent to individuals with the agreement that the borrower repay the same as soon the borrower’s paycheck is received. For some however there is really no definitive description of what a payday loan is except that it is short term high cost loan. The loan is normally repaid in a single payment and is due two to four weeks from the release of the loan. Payday loan is at times secured by a post dated check for the same loan amount issued by the borrower to the lender or in some cases provide the lender the authority to withdraw funds from the borrower’s bank account and/or credit union. Payday loan can be a life saver especially at times when an unexpected expense suddenly arises. They are easy to apply for and hardly require any documentation from the borrower.
Advantages of Payday Loan
BORROWING via payday loan can be very convenient because it is very accessible to individuals who are cash strapped. People who avail of this type of loan need only to fill up a very simple application form and its approval is almost immediate. Collateral is never a problem considering that a person only need to issue a post dated or provide authority to the lender to have access to the borrower’s forthcoming cash funds. Payday loan only takes a few hours or less to be approved so a loan applicant can get hold of the needed cash in just a matter of hours.
Disadvantages of Payday Loan
The most obvious disadvantage of payday loan is its high interest. This is the reason why it necessary that the loan be immediately repaid upon its maturity. Another is that this type of loan is never ideal to cover long term financial problems. The loan is only suitable for urgent financial problems that need immediate financial solution. Always remember that prior to getting this kind of a loan carefully and thoroughly evaluate your financial problem first to see whether payday is the right way to solve your financial crisis.
The high cost of goods and services today at times put the average workers in a financial bind. Almost everything has doubled in price including utilities and the much needed health services. It is therefore natural to see people contemplate in BORROWING money from friends, relatives or in commercial and private financial establishments. However, being in a financial bind should not stop you from thinking and planning wisely on how you should go about filing or asking for financial loans.
Assess Your Financial Status before Borrowing
Even before contemplating on borrowing money for an emergency expense, make a quick but a very thorough study of your current financial situation because after organizing your finances you may just discover that you don’t really need to borrow money or at the least find that you only need to borrow a smaller amount to cover your needed expense.
Who to Go To First
After you’ve carefully analyzed and studied your current situation and you find that you still would need to borrow money, start to study and analyze on the who, how and where to avail of a reasonable amount of loan. If the amount is not sizable, you can perhaps go to friends or relatives for the loan. This is perhaps the best option for a small loan because in all certainty these people will lend you an amount without the burden of paying the loan back with interest. If the loan is a sizable one and you feel that the amount would be a little too much for friends and relatives to help you out, your next option is to apply for a PERSONAL LOAN from a bank or any other financial institutions from a list of moneylenders in Singapore that offers reasonable rates on their interest or if you have a credit card with a sizable CREDIT limit, use the same to get the needed cash.
Before Getting the Loan
When you’ve finally decided where to borrow the money from, first take a second look on your repayment plan. Make sure that it’s foolproof because if it’s not, borrowing the money may just put you in a much worst situation than you are in now.
For one reason or another, many of today’s wage earners are now applying and getting financial loans from various financial institutions. For some salaried individuals who have little chance of BORROWING from large banks, it is not surprising that small lending companies that offers PAYDAY LOANS and other high interest loans are starting to be the popular “go to” lending institution today. Payday loan as we all know is a small unsecured loan package provided from a money lender to a needy individual. It is usually short term and its interest is a lot higher than those offered by bigger financial lending companies.
Borrowing Money from Various Financial Institutions
Whether it is payday loan or PERSONAL LOAN, there are various ways and reasons why people borrow money. For most businesses, bank overdraft is common. This is where a bank allows its client to withdraw more than what is actually in businesses’ bank account. For individuals however, getting cash loans is the most common. Unsecured and secured loans are the ones most applied for from various lending companies. Unsecured loans, as the term connotes have higher interest rate than the secured loan. The reason for this is that unlike secured loans, unsecured ones do not require the borrower to provide collateral for the borrowed amount. One of the easiest ways to borrow money is to mortgage any of your personal assets for cash. However the disadvantage of this type of a loan is that more often than not, the amount provided by the lender against the asset is usually way below the actual value of the property.
The Basic Principle of Borrowing Money
For Private individuals and businessmen, borrowing money will have different goal. For an individual, loans are needed basically because of a financial crisis and that borrowing money will not be a financial advantage. The goal is to be able to meet the unexpected expense and to repay the loan without bringing a larger financial crisis to him. To a businessman, the basics is to be able to get a loan whose interests and cost of obtaining the same should be less than the value that has been created in getting the loan amount.
PERSONAL LOAN is a type of unsecured loan granted to an individual by banks and other lending institutions. The loan falls under the category of an unsecured loan where no security or collateral is required. In most instances, unsecured personal loans are normally provided by the bank to clients that have been doing business with them for a sizable amount of time. In some cases, personal loans are also known as character loans because the borrower is usually known or a client of the bank. BORROWING money via personal loan is usually low in terms of the amount that can be borrowed. One disadvantage of this type of loan is that its interest is relatively high.
Requirements Needed For a Personal Loan
Prior to releasing a personal loan, the lending institutions will initially and thoroughly check several factors relative to the borrower in order to decide whether said applicant is qualified for the loan. The bank would normally check the loan applicant’s CREDIT Score, his other unsecured debt, current bills, current income, his capacity to pay back the loan and more importantly to know whether the amount being borrowed falls within the limit of the bank’s allowable amount that can be released to a borrower.
What is a Credit Score?
An individual credit score is usually the most important factor banks usually take into consideration before approving a personal loan. A credit score is a statistical number that shows an individual’s “credit worthiness”. These numbers determines whether the loan applicant will be able to repay the loan being applied for. These numbers therefore defines the loan applicant’s credit history. The numbers range from 300 to 850 with 850 being the highest score a borrower can achieve.
Personal Loans as unsecured debt
Personal loans are unsecured debts with a variable interest rate. Credit cards, variable balloon payments on car and/or house loans are classic example of unsecured debt. One very dangerous risk that lending institution takes when providing unsecured loans is the possibility of the borrower to not be able to meet his monthly payment or worst to abandon paying the whole amount of the loan.
The growth in world economy plus modernization in the fields of science and technology (especially in the field of medicine) have greatly influenced people’s management of their financial earnings. It is not uncommon today to know that their earning capacity is usually not enough to cover their daily expenditures. This is true especially for those who encounter emergency financial expenses or even for those who would want to know how good it feels to have a little more than just the simple things in life. This situation forces them to look for ways to increase their financial capacity to spend and BORROWING money from any reputable financial institutions is the most common solution to achieve this.
What is a Loan?
A substantial salary allows individuals to be able to apply for a PERSONAL LOAN from any reputable public or private financial institutions. Loans help them meet some of the incidental expenses that may face. A Loan is a fixed sum of money borrowed from private or public lending institutions (such as banks) with the condition that the loan be paid at a pre-determined date and with the agreed upon interest. The amount of loan and interest varies and is usually based on how much the borrower is earning and his capacity to pay. There are various types of loans that an individual can apply for. There is the PAYDAY LOAN, educational loan and the likes. The most common type is the credit card which falls under the category of Open-Ended loans because it can be used to borrow money, various goods and services several times over.
Common Reason(s) People Apply for Financial Loans
There are generally two basic reasons why individuals borrow money. The first and most common is an emergency expense such as sudden medical procedure that needs to be done immediately or the need for a major home repair destroyed perhaps by bad weather. The other reason is plain whimsical or simply self serving such as wanting to buy a new car when in fact the old one would still do. Whatever the reason is, applying for loans these days are no more but common occurrences and the reason of which will solely depend on the purpose of the individual.