If you are considering a payday loan from a moneylender you should read the “Notes for Borrowers” (PDF) from the Ministry of Law Singapore.
Online payday loans
Online payday loans may offer a quick and convenient way to borrow, but they also carry a high level of risk.
With the rise of technology, more and more payday lenders are offering online payday loans in Singapore. Such applications usually take around mere minutes to complete. If approved, borrowers often receive the funds within one business day. Although this sounds incredibly convenient, applicants should fully understand online loans available before making an application. As such, this guide will cover online payday loans in Singapore including the fees, risks and eligibility requirements involved.
What is an online payday loan?
An online payday loan is a short term loan that’s usually for smaller amounts. Once the lender deposits the funds, the borrower must pay it off in full by the end of the loan term. The customer usually must make regular repayments according to the frequency of their pay (for example, fortnightly) and depending on the loan, the term may be as short as 4 weeks to as long as 36 months.
What to compare before applying for an online payday loan in Singapore
- Loan amount. The more you borrow, the larger the repayment amounts and fees will be so it’s important not to borrow more than you need and can afford to repay.
- Loan term. It’s important to choose a loan term that offers enough time to repay it in full.
- Repayments. Payday loans usually require borrowers to make regular repayments that line up with their pay frequency. The repayments will be outlined in the contract before the loan is processed, so it’s important to pay attention to these and ensure that you can afford them before signing anything.
- Fees. Lenders charge a one-off establishment fee as well as monthly fees. However, do take note of hidden costs like late payment or default fees.
- Security of lender. Before applying with an online lender, make sure that it’s a responsible and reputable credit lender. Check that the lender has a credit licence, read reviews online and try to get in touch with the customer service and ask a few questions to see if they’re helpful, transparent and easy to contact.
- Turnaround time. Some lenders deposit the loans in as little as 30 minutes while others will take one business day to send the loan. This factor will be important if you’re trying to secure urgent financing.
How to apply for an online payday loan in Singapore
Once you’ve compared your options, confirmed that you can afford the repayments and fees, you can consider applying for a loan online directly via a provider’s website. Before you start the application, check if you meet the eligibility criteria to complete the application. The specific requirements will vary between loans, but typically includes:
- Income. Applicants must receive an income. The specific threshold will be specified by the relevant provider.
- Credit history. Some online lenders will accept applicants with bad credit, but applicants must still meet the other criteria and demonstrate their ability to repay the loan.
- Residential. Most lenders will only accept online applications from Singaporean citizens or permanent residents.
- Age. You must generally be 21 years or older to apply.
As payday loans are an expensive form of credit, you shouldn’t apply for one unless you’ve compared your options and are sure that you can afford to make the regular repayments for the length of the loan term.
And as always you should read the “Notes for Borrowers” (PDF) from the Ministry of Law Singapore if you are considering a payday loan.