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:
- 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.