Understanding How a Payday Loan Works

A payday loan is a short-term loan where a borrower receives cash based on a check that the borrower issues. The amount being loaned is equivalent to the cash that the borrower receives based on his income or salary. The check being written by a borrower includes the amount of money that was borrowed plus all the fees and interest charges based on the principal loan amount.

These checks are held by the lenders until the date the borrower agrees to pay the lender. Borrowers are still allowed to pay in cash. They can redeem the check by paying cash. If the borrower is unable to put fund in their checking account and are unable to pay the loan, the lender will compute the additional finance charges which the borrower can pay off and extend the date for which the loan is due. This will allow the borrower enough time to fund the bank.

Requirements for a Payday Loan

Payday loans have one of the most relaxed requirements for a borrower to make a loan. All a borrower needs as basic requirements are the following:

  • Identification
  • Bank Account – Preferrably a Checking Account, and;
  • Steady Source of Income

Having all these requirements at hand allows an individual to make a payday loan in singapore unless the lending institution requires additional requirements to be submitted.

Payday Loan Terms

Terms to pay a payday loans often are due within 30 days from the time the loan was granted. Other payment options may be used depending on what has been agreed on. Because of the nature of the loan being in small amount and shortened term, the interest rates from these loans are higher than other types of loan. These payday loans are for the intention of using cash for immediate needs rather than funding or financing.

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Understanding How a Mortgage Works

Buying a home is one of the biggest achievement one can have. Now it is becoming more and more affordable with the help of mortgages. A mortgage is actually a loan that is made to purchase the house and is paid through staggered payments known as amortizations. These staggered payments include interests and fees that serves as payment for the borrowed money. Here are some principles that can help in understanding how mortgage works.

Mortgage as a Secured Loan

Mortgages are loans which are considered as secured loans. Upon mortgage being approved and loan amount being granted, the bank or mortgage lender puts a lien over the property being purchased. A home equity value is earned by the borrower based on the amortization payments that have been made.

Unlike unsecured loans, mortgage loans earn a lower interest rate due to a low risk of recovering the loan amount because of the secured collateral.

Purchase Affordability

As mentioned earlier, purchasing a property through a mortgage is proven to be more affordable for most buyers as it allows staggered payment of a high value home. The affordability can be planned accordingly by the borrower depending on the amount being borrowed and the down payment that is being applied upon purchasing the property. This allows the borrower to adjust the amount that they are willing and able to pay during the term of the mortgage.

Applying for a Mortgage

A mortgage is often granted by a bank or financial housing institution that has been established by the government. Upon applying for a mortgage, the lender will interview the borrower and require some documentation on the buyer’s capacity to pay and credibility to apply for a loan. During the interview, the lender will identify how much you are able to pay, how long you are willing to pay the mortgage and where your source of payment will be.

Once the mortgagor has identified and established your capacity and capability of paying, a loan amount will be granted to you for purchasing your property and/or building your home. Indicated in your mortgage contract would be your schedule of payment or amortization and the fees and penalties.

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Types of Payday Loan Scams

Payday loan scams are one of the fraudulent acts that both borrowers and lenders need to be aware of. Avoiding these payday loan scams are sometimes inevitable especially to those involved without their knowledge. Having the idea on what these payday loan scams are can help both the borrower and the lender to avoid falling into the trap of scams.

Here are common payday loan fraudulent schemes done by scammers:

  1. Creating Payday Loan to Fictitious Borrowers

This often happens when there is a middle man or a broker between the borrower and the lender. The broker in this case would create a fictitious application that is submitted to the lender for processing. This type of scams can be perpetrated by parties external to the lending institution like the broker, or a borrower with fictitious identity. Brokers often have less security checks compared to actual lenders. Fraudulent borrowers often get shielded by brokers from lenders background check.

  1. Payday Loan Kiting and Kickbacks

Kiting is a form of fraudulent act where the funds are being pulled from one source of funding and paid off from another source. Of course, not without kickbacks being done by the borrower. When common fraudulent practice that these scammers do is by paying off a payday loan with an amount coming from another payday loan which is higher in value. Because payday loans often don’t require credit scoring check, it is easy for the borrower to make a payday loan simultaneously.

  1. Hidden Fees and High Interest Rates

Payday loans are one of the types of loans that are accused as scams because of the high interest rates and fees it charges its borrowers. But as long as these lenders follow the guidelines and policies of interests and fees, they should be fine. As a borrower, you do need to be cautious of lenders who put in extra interest rates and finance charges often excluded or not clearly written in the contract. Find out by getting a review of the lenders to avoid getting into a deal with them.

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Types of Credit Card Fraud

With credit card nowadays being able to purchase anything, the information one has stored in his credit card is enough information to be good as cash. And we all know that anything that involves cash and purchasing power is subject to fraudulent acts. There are a number of types of credit card frauds that happen and victims often have a hard time recovering the lost cash unless the act was covered by an insurance term.

Here are some of the credit card scams you can be aware of to help you prevent it happening to you.

  1. Identity Fraud

This is a common fraud recurring in the credit card industry where a scammer applies for a credit card under someone else’s name. This type of fraud can be done through applying for a credit card using someone’s personal information or skimming an existing card to steal the information and imprint on a fake card. Stealing someone else’s personal information, the scammer is able to obtain a credit card that he can use and purchase goods and services. The charges applied are then charged to the person whose identity was stolen. The scammer is then free from paying the purchases he has made.

  1. Account Takeover

This is a type of fraud where the fraudster steals the information of the account owner and uses the information to request for a new card on a new address. Once the new card is in the hands of the fraudster, they are able to activate the card and use it freely without the owner’s knowledge.

  1. Counterfeit Cards

This happens when a valid credit card is “cloned” or copied and a duplicate card with the needed information is created. This duplicate card allows the fraudster to use the cards without the account owner’s knowledge until he receives the statement where he sees purchases he has not made.

Credit card fruads are one of the most common acts of scams that seem to be present in the financial industry. Banks and financial institutions have been improving and implementing measures for better security.

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Understanding How a Personal Loan Works

A personal loan is both the borrower and the lender’s favorite mode of financing. With easy application process, it favors the borrower who may require immediate fund that can address his needs. For the lender, due to the easy application and approval process, a personal loan entails high interest rates. This allows the licensed money lender in sg to earn more from their money being borrowed.

With rising personal loan applications, this type of loan becomes one of the most sought for loans across the industry.

Use of Personal Loan

Personal loans, as the name suggest, it’s personal. You can use the amount of money at your discretion. Unlike secured loans that require specific funding like mortgages and auto loan, personal loans are unsecured and do not require you to use it for a specific spending.

Borrowers can use personal loans to consolidate debt or even repay a credit card. This can help you pay off a debt with higher interest rates or consolidate debts for better management. In some cases, it can be used for household repairs and improvements or medical expenses.

Large One-off Purchases

It is highly discouraged to use personal loans for one-off spending such as travelling, events, or expensive items. Try saving up cash for these types spending as the personal loan incurred will only add to your monthly expense during the term of the loan.

Saving up for these expenditures makes it all worth it. Being able to save and pay for these purchases in cash allows you to only really spend and buy the things you can afford. Limit your loan spending to your need.

Take Advantage of Personal Loans

You should always have a mentality of taking advantage of personal loans for the benefit of addressing your needs and goals. Personal loans are useful tools involved in financing like consolidation and refinancing.

To top it all off, personal loans does not require collateral. That said, it is easier to take a personal loan than any other secured loans. You will just need to deal with the higher interest rates it goes with.

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