Imagine this: You opened the fridge to prepare lunch one afternoon to find it not functioning. You need to save all the food before they turn bad, and the only thing you can do is get a replacement fridge, pronto.
Unfortunately, you’ve used up your savings for the month on other important expenses, and payday is another two weeks away. Now, what are you going to do? Perhaps you can consider taking up an emergency payday loan for your new fridge. This article will tell you everything you need to know about applying for emergency payday loans with a direct lender.
What is an emergency payday loan and how does it work?
An emergency payday loan is a short-term loan that is to be paid within the month, or on the borrower’s next payday. The payday loan is usually a small amount of cash, capped at the borrower’s one month’s salary, to pay off financial emergencies such as medical bills. An emergency payday loan is meant to tide them till their next salary.
You can apply for an emergency payday loan through direct lenders such as licensed moneylenders in Singapore.
Where to take emergency payday loans: Banks or Licensed Moneylenders?
In Singapore, it’s important to note that banks do not typically offer payday loans, which are short-term loans that are usually due on the borrower’s next payday. However, banks do offer personal loans that can be used for emergencies or unexpected expenses.
To help you decide if it’s better to take a personal loan from a bank or a payday loan from a licensed money lender to meet your emergencies, you need to consider these factors:
1. Approval of Loans
As banks are authorised to lend more than licensed money lenders, borrowers will need to go through a stricter vetting and approval process. They will check your loan eligibility, such as minimum income requirements and your credit history – these processes might take up to 2 weeks and may not be the best option if you need quick cash.
Licensed moneylenders on the other hand are less strict, hence you enjoy a higher chance of loan approval. If you’ve provided all the documents required, you’ll also enjoy a faster approval process — expect to get your cash on the same day, usually in less than 30 minutes.
2. Minimum Requirements – Age and Income
Applying for personal loans from banks requires borrowers to be at least 21 years old. Singaporeans and Permanent Residents (PRs) need to earn at least $20,000 a year to apply, while the minimum annual income requirements for foreigners range from $40,000 to $60,000. Banks would generally be more willing to loan to those who have a stable income and good credit history.
The minimum age required to apply for a loan from a licensed moneylender is 18 years old. They are also open to all loan applications regardless of your circumstances. If you’re unemployed or have a bad credit history, you can still apply for emergency payday loans with a licensed moneylender. However, you might not be able to get the best interest rates or loan terms.
The table below details the maximum sum you can borrow from licensed moneylenders in Singapore at any one point in time.
| Annual Income of Borrowers | Singaporeans / PRs | Foreigners |
| Less than $10,000 | $3,000 | $500 |
| More than $10,000, less than $20,000 | $3000 | |
| Above $20,000 | 6 times your monthly salary | 6 times your monthly salary |
3. Interest Rates
Banks in Singapore offer interest rates of 3.5-11% per annum, while licensed moneylenders are legally allowed to charge up to 4% per month (up to 48% per annum). Interest rates are usually higher with money lenders as the lenders are taking a higher risk due to their less stringent approval processes.
Although a bank loan is more affordable, applying for a loan with a licensed money lender is easier and faster if you need urgent cash for emergencies. This is especially true if you just need a small amount you can repay quite quickly when you receive your next paycheck.
Additionally, moneylenders check your borrowing history and limits (with other lenders) with the Moneylenders Credit Bureau when processing your loans. If you have made timely and consistent repayments on your previous loans, moneylenders might offer you a lower and more attractive interest rate and a chance for higher loan amounts.
How to compare emergency loans from various direct lenders?
Personal loans from banks are usually longer-term loans with lower interest rates, while payday loans from licensed moneylenders are typically short-term loans with high interest rates that are designed to be paid off on the borrower’s next payday. While payday loans may be a quick and easy way to access cash, they come with higher interest rates.
Before choosing a loan, carefully compare the terms and fees of each option to select the best loan for your individual needs and financial goals. Regardless of whether you are applying from banks or licensed moneylenders, you must first do thorough research.
How to get an emergency payday loan from a licensed moneylender
If you decide to get a loan from a licensed moneylender, do ensure that the lender you are considering is licensed. You can check their business name against a list of licensed moneylenders in the Ministry of Law’s Registry. If the moneylender isn’t registered on this list, it is not licensed.
Do also try calling up the office landline (given in the registry) of the lender to double check; sometimes illegal lenders might use the business names of legal money lenders while providing a different phone number.
When you receive your quotes, make sure you compare the different loan terms, such as interest rates and other processing fees before applying. Some moneylenders offer flexible repayment. If you think you can’t pay off your payday loan within the month, you can discuss your situation with them, and they might offer you a repayment plan that suits your needs.
Like any other business, good customer reviews mean lenders have successfully provided the best service for their clients. To find a reputable licensed money lender, read their Google reviews. Find out how the company treats their customers and learn about the process through the experiences of others.
How to apply for an emergency payday loan?
Simply take a few minutes to fill up an online application form. Then, wait for a loan officer to call you regarding your loan and request you to head down to their office. By law, you will need to physically head down to the money lender’s office for face-to-face verification.
Remember to bring all relevant documents with you, including identification documents (e.g. NRIC, passport, and work permits) and proof of income (e.g. payslips from the last three months, bank statements, commission statements, etc). Foreigners will need to bring additional proof of home address (e.g. rental agreement, utility bills, or mobile phone bills).
After verification and if your loan is approved, the loan officer will ask you for the date of your next payday, so that they can schedule the loan repayment date on that day. You will then need to sign your loan contract. Ensure that you understand all the terms (e.g. interest rates, late fees, and repayment date) before you sign. Clarify when in doubt, and only sign when you’re clear with everything and agreeable with the terms.
You will then be able to get cash immediately or have it credited into your bank account.
Why apply for an emergency payday loan with GoldStar Credit?
GoldStar Credit is a licensed moneylender approved by the Ministry of Law in Singapore. We offer a hassle-free loan application process with fast approval times, allowing you to receive your emergency loan in as little as 30 minutes. Our team of friendly and knowledgeable loan officers is available to answer any questions you may have.
Contact us today to learn more about our emergency payday loans.
