Payday loans, as the name suggests, is a short-term loan that is usually required to be settled as soon as your next payday arrives. As opposed to a personal loan that is usually repaid in monthly installments, payday loans tend to be repaid in full at the same time, except for some cases.
Before taking a payday loan, however, be sure that you are dealing with a trusted moneylender.
A potential issue with payday loans is their ability to lead the borrower into a debt trap if not handled well. If you are not able to pay the debt within your next payday, you will be forced to take out another loan to repay your payday loan. This can spiral into a debt trap that is hard to get out of, in which you are continually taking loans to pay back your existing loans.
Pawn shop loans
Pawn shop loans generally require the borrowers to surrender a valuable item before they can acquire the loan. A pawn shop will measure the price of the said item and take it from you to serve as collateral for the loan.
If you are not able to settle the loan on time, the pawn shop has the option to sell your item as a consequence. Since a pawn loan does not require a credit assessment or even an application process and will give you a loan if you have a valuable item, it can be great for people that do not have a lot of choices.
An additional alternative is a title loan. If you are an owner of a vehicle in Singapore, you can make use of the title of your vehicle as leverage in order to qualify for a short-term loan. Vehicle loans are definitely a good choice especially if you need the money fast because usually, there are no credit assessments required. However, be aware of the possibility of your car being taken away if you are not able to pay back the loan in time. Due to that risk, you must take care when choosing this type of loan and refrain from unnecessary expenses.
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