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Differences between payday loans vs credit card cash advances

Differences between payday loans vs credit card cash advance

Singapore – If you have been researching and comparing credit card cash advances and payday loans, you might get confused between their various offerings.

Credit card companies are stiffening up the competition as they compete amongst themselves and the different moneylenders to offer fast cash loans to people.

Getting loans is easy in Singapore with different schemes for different package offerings. Banks, licensed moneylenders and a variant of loan companies all offer a type of loan for different consumers. So let’s narrow down to the loan types of payday loans and credit card cash advances.

Let’s look at payday loans

Basically, when you are looking for personal loans in general, you might have seen different terms used interchangeably; payday loans, personal loan, cash advance, fast loan. In this article we make reference to payday loans which is part of a personal loan type.

The definition of a payday loan – A payday loan is referred to as a short-term loan that allows a person to take up a loan amount based on their salary. There’s a minimum monthly income cap depending on the moneylender rules and borrowers who have a much higher verifiable income salary would be able to borrow more money.

Payday loans (also called “payday advances” and “personal loans”) are a subset of unsecured loans, meaning there is no collaterals needed. Payday loans are granted based on your income and are tailored to the borrower’s ability to pay back in a certain timeframe. Sometimes payday loans can be paid back in multiple split payments, but are required to pay back the entire amount with the agreed interest.

Licensed moneylenders provide payday loans and the interest rates may vary accordingly. One of the greatest advantages of payday loans would be negotiable or adjustable repayment plans. This will greatly help you in terms of money management as one can better plan their finances.

Another great advance that legit moneylenders offer are simple policies on their rates. Only an interest rate is charged on your loan amount with zero hidden charges.

What about credit card cash advances?

Credit card cash advances in Singapore

Credit card cash advances in Singapore. A look into the definition and misconceptions on credit card cash advances. The things to look out for.

Credit card cash advance is based on your available credit limit on a credit card rather than your monthly income. A credit card cash advance is generally treated like a purchase made with a credit card and the repayment terms are strict.

A cash advance on a credit card may or may not offer you a better deal than a payday loan depending on your own credit ratings and whether you are credit qualified. Some credit card companies charge higher interest on cash advances as compared to payday loans offered by moneylenders.

Cash advance loans comes with your monthly credit card bills and are to be repaid accordingly. Interest is compounded daily and they require a substantial application fee when you request for a loan.

There are hidden charges on loan amounts which could be transaction fees, late payment fees, card fees, withdrawal fees, setup fees, bank service fees which the borrower might not be aware of.

To make matters even worse, many credit card companies require you to pay off any existing non-cash-advance balance (the normal purchase you make) that you might be having on your card. This means that they force you to pay up the amount with lower interest rate first, while the cash advance balance remains untouched, with the amount owed increasing and compounding interest.

Credit Card cash advance fake cheque technique

Credit Card cash advance fake cheque technique

Ever received a “credit card cheques” from credit card companies in your mailbox? Cheques offering a big lump sum to you? This is one of the biggest misconceptions faced by people. These “cheques” are treated as credit card cash advances by credit companies and it comes with all the accompanying disadvantages. People will feel it’s easy credit, but not realizing the multiple charges on such a loan.

In Singapore, credit companies cap the maximum loan amount based on their credit limits. Cash advances charge hefty interest or finance charges from day one of the loan till the day payment is made in full.

They do have their advantages, whereby the borrower can withdraw cash at the credit company’s ATM or request for loans to be transferred to the borrower’s own bank account. Some offer loan application via phone (cash-on-call) or SMS.

As a rule of thumb, hefty charges can be avoided if you pay the full amount on your credit card statement every month. Ask your card issuer to explain how interest is computed and to provide you with a case study loan amount.

Comparison and Outcome. Choose Wisely.

So what’s the best course of action for a borrower? At times, payday loans could have higher interest rates than credit card cash advances. This is due to moneylenders face higher risks of not being repaid.

However, if you have been a repeat customer with a great history of prompt repayment, licensed moneylenders would usually offer a better rate or repayment policy for you. You could also discuss with the loan officers and they will advise on  a repayment plan for you.

Payday loans offer great flexibility in terms of repayment policy and if repayment time periods are a consideration for you, you are much better of with payday loans. Payday loans also offer no hidden charges and allow lower-income people who cannot get a credit card to take up a loan.

Choose wisely based on your loan requirements and make the right choice for you. Regardless of which loan offering you are after, do your research wisely, check reviews and check out the competitors.

Should you require better advice or have any doubts on loan offerings, feel free to drop a message to us or a phone call and our friendly loan officer will service you.

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Repayment Loan Plans – Choosing the right one

Singapore – Repayment plans are the next most important thing to think about when you are applying for a loan. The first is of course the loan amount. Deciding your repayment plan and budgeting your financial situation will allow one to make a wiser decision on their loan plans. There are several repayment plans to choose from and many money lenders offer these plans. Some minor variations in terms of loan amount being dependent on the length of repayment chosen. Larger amounts typically requires a longer repayment plan as its allows adjustments on the money lender to accommodate to the loan request.

What are the Repayment Types available?

Weekly Loan Plan (Lowest Interest Rates)

This repayment requires borrowers to make payment every week. A typical repayment plan spans 5weeks and offers the least interest rates. If your loan amount is small, it is best to choose this form of repayment to avoid unnecessary interest charges.

Bi-Weekly Loan Plan (Mid-tier interest, Small Flexibility)

This repayment requires borrowers to make payment every two weeks. A typical bi-weekly plan spans between 2-4 bi-weekly repayments. This loan is usually higher in interest as compared to the weekly plan. However it gives borrowers a small amount of flexibility to coup with the payments.

Monthly Loan Plan (Medium Flexibility, Higher interest)

This repayment requires borrowers to make payment every month. Depending of the financial needs and situation of the borrowers, monthly loan plan can span up to 10months. This plan allows better flexibility for borrowers to cope with repayment.

Open Monthly Loan Plan (Highest Flexibility. Large loan amount)

This repayment requires borrowers to make minimum interest every month.This loan provides the highest flexibility and usually used for larger loan amounts. Should the borrower be unable to cope with the interest rate, he/she can opt to pay only the interest amount each month. If there’s any extra cash that the borrower wishes to repay, he/she can choose to make particle principal principal.

The bottom line is clear and simple. So long as you keep on top of your repayment scheme, all you have to pay is merely just one transparent interest amount, at fixed monthly interest rate for the agreed duration of your loan, plus the principal loan amount you have borrowed. Of course, each loan we offer you is subject to meeting our minimum requirements. We are more than happy and willing to clarify any aspect of the loan agreement with you, including the loan amount and repayment schemes.

What if I default?

Although it is unwise to default on a repayment plan but in these times of difficult economy with the addition of the high cost of living, it has put lots of people on financial strains. This is where reputable loan companies will help and advice you. Ask for a deferment on the repayment by paying a fraction of the repayment or request for a variation plan. Borrowers can also opt to switch to a longer repayment plan if they cannot afford to make the required repayment.

Our advice when you get a loan?

There are many loan repayment plans to choose from and each have different advantages. Depending on your monthly salary and income, always choose the plan most beneficial to you. Here’s some advice on seeking a personal loan plan.

  • Always seek out a reputable and licensed moneylender to give yourself a piece of mind. Seek out loan quotations from lenders and choose them wisely.
  • Be responsible to your loan repayment. By being on time with your loan repayment, you build a good credit line which allows you easier access to future loans with larger amounts being approved.
  • Be aware of the costs of full loan repayment including the principal amount an interest. Ensure that you have the financial means to meet these repayment plans
  • Ask for advice from the loan officer. They will be most pleased to hear your end of the story and help you on your repayment choice.
  • Loan officers are humans too. If you have difficulties repaying or need money, opt for a reloan or ask for some flexibility in your loan plan.

In short, be realistic on your ability to repay the loan punctually. This allows you to save on interest rates and manage your loan well.

Empire Global is a reliable money lending institution and have loan officers that are seriously dedicated to helping their customers. Loan officers here always ensures that any person applying for a loan will be given adequate information on how interest rates or additional charges are calculated. Empire Global has been providing speedy loan application approval with competitive interest rates. If you are Interested in getting a personal loan from a respected company then contact Empire Global staff today and speak with them on your financial position.