Often people face some emergencies and need additional cash. It usually happens when the man has spent all his money and his next salary is in a week or two. There are plenty situations that might occur exactly when they shouldn’t. For example, car repair or some urgent bill, are the top of the list of unexpected expenses. Of course, some people can borrow money from their friends and family, but some can’t. They usually find some random money lender and get into some serious debts in no time.
Money lenders offer their customers so-called payday loan.
You might guess, what means payday loan, but we will explain in depth. The amount is not a big one, actually often is less than $1,000 because usually unexpected expenses are not big at all. Payday loans in Singapore are given for a short period and relatively higher interest rate explains LoanSingapore.sg. These features are common for payday loans because it is expected that the loan will be returned as soon as the client gets his next paycheck.
This type of loan is famous all over the world. Actually, Wall Street Journal has research that shows this business is valued in $38.5 billion in the USA, only. Most countries, though, don’t have special regulations for money lenders, and they bloom. Singapore is not one of these countries. In 2015 Singapore government accept special regulations that forbid money lenders to charge their clients an interest rate bigger than 4% per month. This is needed because some business owners misuse their rights. In addition, every moneylender should have a license that gives him the right to lend money legally. The absence of this license makes them illegal all together with his clients.
Payday loans are approved for a day in Singapore.
Sometimes if the client is really bad borrower the loan is refused but these cases are a rare event. Most often people’s documents are checked and copied and there is a fast background check how big salary the client receives every month. This can’t be skipped because the amount of the payday loan depends on the amount of the client’s salary. If his income is bigger he can apply for a bigger loan. It is pretty simple; money lenders will not give a loan to a man who will not manage to give it back. There is no point in a business like this.
Some studies claim that payday loans are not the best idea at all because of the higher interest rate and taxes. Their main argument is that interest rate is too high for such a short period loan. Another thing you should have in mind is that sometimes money lenders use taxes instead of higher rate. However, in Singapore, all these things are regulated by the law so borrowing a payday loan from there is save. In the USA, for example, up to 80% of people manage to pay their loans first 4 weeks, but 50% of them eventually pay more than they have received. One additional catch is that some loans are withdrawing money from your account automatically. This means that in the minute that you receive your salary; they will withdraw their payment with taxes so you will feel out of control. Unfortunately, this is a famous practice all over the world and there is nothing that we can do to change it.
Payday loans are not the best thing but people need them. There are plenty of regulations for clients and for money lenders, both.