Payday Loans in Singapore: What Is It & Should I Be Using It?
Most of us might be familiar with personal loans, but payday loans may be more of an unchartered territory. In general, payday loans are taken on for many reasons like cash liquidity for your business or unexpected expenses like medical expenses, etc., which is among the quicker ways to cope with emergencies that require instant cash.
However, with every loan comes greater responsibilities and liabilities. We should carefully consider our financial situation and other factors before committing to payday loan repayments. To avoid any financial missteps, let’s take a look at some of the considerations before taking on a payday loan, and how it compares to a personal loan.
TLDR Summary: What To Know About Payday Loans
- Payday loans are short-term loans offered by approved licensed lenders rather than traditional banks. They’re designed to provide immediate cash before your next paycheck.
- Payday loans often charge high interest rates. For instance, some legal lenders charge as high as 24% interest for a two-week loan period, which translates to significantly higher APR.
- In general, personal loan interest rates vary across licensed moneylender, loan amount, tenure, and borrower’s credit profile. In 2025, the average personal loan interest rates advertised ranges between 2.49% to 5.54% p.a.
What is a Payday Loan?
Most payday loans available in Singapore are also known as cash advance loans or salary loans. They are short-term, high-cost loans with high interest rates that provide quick cash before your next paycheck. They are typically offered by licensed moneylenders, not banks.
In contrast, banks in Singapore traditionally offer personal loans or credit lines, with longer tenures and lower interest rates.
Types of Payday Loans
These are conventional payday loans that are basically, applied for and funded online, with the loan amount electronically deposited directly into the borrower’s bank account.
The loan amount is divided across multiple scheduled payments, instead of being due in full at once.
Additionally, these loans typically have lower interest rates compared to traditional payday loans.
These are granted lines of credit up to a specified limit, allowing the borrower to withdraw funds as needed.
Interest is only charged on the amount borrowed.
How Does A Payday Loan Work?
Flexible Loan Amount
The loan amount provided through a payday loan is usually a percentage of your monthly income as a borrower. The specific amount offered may vary depending on the bank’s/lender's policies and your income level.
Repayment Period and Terms
Payday loans have a short repayment period and are typically due within a few weeks or by the next payday. The loan term is designed to be brief, allowing borrowers to quickly address their immediate financial needs and is typically outlined in the loan agreement.
Most payday loans require you to repay the loan in a lump sum, including the principal amount, interest, and fees, by a specific due date. The repayment is usually done through automatic deductions from your bank account.
That said, the borrower’s repayment period is subject to legal lender’s policies and discretion. A loan extension may be requested in some cases.
Interest Rates and Fees
Payday loans generally have higher interest rates compared to traditional loans. Interest rates typically from licensed moneylenders range from 1% to 4% per month. Interest rates and applicable fees need to be disclosed to the borrower upfront, as mandated by the Monetary Authority of Singapore (MAS). It's crucial for borrowers to review and understand these terms carefully before agreeing.
Less Stringent Credit Requirements
Another benefit of payday loans is that it is more accessible to those with limited credit history. Since it functions similarly to personal loans obtained from licensed moneylenders, they rely less on your credit score for approval. This makes it easier for individuals with less established credit history or poorer credit scores to still qualify for legitimate loans.
No Need for Collateral
Since payday loans are usually unsecured, borrowers do not need to pledge any assets (like property or car) as collateral to apply. This makes payday loans from licensed lenders more accessible to those without any viable assets to offer.
Loan Approval and Disbursement
Once submitting an application, the legal lender will assess your eligibility and conduct a credit check. If approved, the loan amount will be disbursed to your bank account fairly quickly, often on the same day or within a few business days.
Licensed Moneylenders vs. Loan Sharks
Many people confuse licensed moneylenders for loan sharks, but that couldn’t be further from the truth. Read our guide to debunk more common misconceptions surrounding legal lenders in Singapore.
Can I Use A Payday Loan For Anything?
In Singapore, payday loans are regulated by the Ministry of Law with guidelines in place to protect consumers. Due to their high cost, payday loans are not intended as long-term financial solutions. Borrowers are cautioned to use them sparingly.
It’s important to carefully assess your ability to repay the loan on time and explore alternative options like bank personal loans for longer term expenses such as home renovations, overseas education, wedding events, cash flow of small businesses or SMEs (small-to-medium enterprises), and others.
While terms and conditions may vary, payday loans in Singapore can generally be used for various purposes, including:
Emergency Expenses
Utility Bills
Debt Consolidation
Pros and Cons Of Payday Loans
Payday loans can provide quick access to cash, but they also come with certain advantages and disadvantages.
Pros ✅
- Fast loan approval
- Quick access to cash
- Easy application process as minimal documents required
- Flexible eligibility requirements as compared to personal loans from banks
- Easily accessible to borrowers with lower credit scores or those who do not qualify for typical bank loans
Cons ❌
- Small loan amounts
- High interest rates
- Risk of perpetuating debt cycle
- Short repayment period
- Negative impact on credit scores if failure to repay on term
Payday Loans vs. Personal Loans: Key Differences to Know
| Payday Loans | Personal Loans | |
|---|---|---|
| Interest rate | Higher | Lower |
| Loan amount and term | Small, short-term loans, ranging from a few weeks to a month long or more | Larger, longer-term loans, ranging from a few months to several years |
| Credit check and eligibility | Not mandatory, no good credit score required | Mandatory, good credit score required |
| Repayment |
|
|
| Approval time | May often be faster than secured loans, as less upfront information is required | May take a longer approval process, as there are more documentation to be submitted for review |
Comparing Interest Rates, Loan Limits, and Fees: Bank Cash Lines vs. Payday Loans
| Personal Loan | Interest Rate | Max. Loan Amount | Annual Fee | Min. Annual Income |
|---|---|---|---|---|
| DBS Cashline | 22.9% - 29.8% p.a. | Up to 10X monthly salary | $120 (First year waived) | $20,000 |
| UOB CashPlus | 17.8% p.a. or 1.48% per month | Up to $100,000 or 2X monthly salary (whichever is lower) | $60 (First year waived) | $30,000 (Between 21 and 55 years old) |
| OCBC ExtraCash Loan | Up to 10.08% p.a. | Up to 6X monthly salary | Up to $200 or 2% of approved loan amount, whichever is lower | $20,000 |
| ValueMax Payday Loan | 4% per month | Subject to inquiry | Subject to inquiry | Subject to inquiry |
| Raffles Credit Payday Loan | 4% per month | Subject to inquiry | Subject to inquiry | $24,000 |
| Bugis Credit Payday Loan | 4% per month | Subject to inquiry | Subject to inquiry | $24,000 |
Explore the best personal loan offers in Singapore below to find the right option for your needs.
Best Personal Loans In Singapore
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Standard Chartered CashOne
- Interest Rate
- From 1.90% p.a.
- Total Amount Payable
- S$10,190
- Processing Fee
- S$0
- Per Month
- S$849
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Enjoy one of the lowest interest rates in the market* starting from 1.90% p.a. (EIR from 3.63% p.a.)!
Choose from up to S$1,200 Cash via PayNow or gifts such as the Apple 13-inch MacBook Air (worth S$1,499), Apple 11-inch iPad Air 128GB (worth S$899), Sony PS5 (SLIM) Digital Edition (worth S$669), Nintendo Switch OLED (worth S$549), or Apple AirPods Pro 2nd Gen (worth S$349). T&Cs apply.
UOB Personal Loan
- Interest Rate*
- From 2.88% p.a.
- Total Amount Payable
- S$10,288
- Processing Fee
- S$0
- Per Month
- S$857
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HSBC Personal Loan
- Interest Rate*
- From 2.20% p.a.
- Total Amount Payable
- S$10,220
- Processing Fee
- S$0
- Per Month
- S$852
Get attractive gifts like an Apple Watch Ultra 2 (worth S$1,199) or a Sony PS5 (SLIM) Digital (worth S$669) or an Apple iPad 10th Gen, 64GB (worth S$499) or an Apple AirPods Pro 2 (worth S$349) or up to S$1,000 Cash via PayNow, when you apply for a min loan of S$8,000 with a min 3 year loan tenure! T&Cs apply.
HSBC Live Your Adventure: Sure-Win Spin with more than 30,000 gifts up for grabs! From 13 January to 13 April 2025, stand to win free trips to London, Tokyo or Bali, Samsonite Luggage, S$200 GrabGifts vouchers, cashback and other exciting prizes! T&Cs apply.
CIMB Personal Loan
- Interest Rate
- From 2.68% p.a.
- Total Amount Payable
- S$10,400
- Processing Fee
- S$0
- Per Month
- S$867
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Get attractive gifts like an Apple 13-inch MacBook Air, 256GB (worth S$1,499) or an Apple iPhone 16e (worth S$949) or a Sony PS5 (SLIM) Digital (worth S$669) or an Apple iPad 10th Gen, 64GB (worth S$499) or an Apple AirPods Pro 2 (worth S$349) or up to S$1,220 Cash via PayNow, in AS FAST AS 2-3 MONTHS, when you apply for a loan through MoneySmart! T&Cs apply.
Trust Instant Loan
- Interest Rate*
- From 2.22% p.a.
- Total Amount Payable
- S$10,222
- Processing Fee
- S$0
- Per Month
- S$852
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Get up to S$1,100 Cash via PayNow or attractive gifts like a Apple iPhone 16 (worth S$1,299) or an Sony PS5 (SLIM) Disc (worth S$799) or an Apple Watch Series 10, 42mm (worth S$599) or an Apple AirPods Pro 2 (worth S$349) when you apply for a Trust Instant Loan through MoneySmart! T&Cs apply.
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- Interest Rate
- From 21.6% p.a.
- Total Amount Payable
- S$12,160
- Processing Fee
- S$800
- Per Month
- S$1,013
- Interest Rate
- From 14% p.a.
- Total Amount Payable
- S$11,400
- Processing Fee
- S$0
- Per Month
- S$950
GXS FlexiLoan
- Interest Rates ¹
- From 2.88% p.a.
- Total Amount Payable
- S$10,288
- Processing Fee ²
- S$0
- Per Month ²
- S$857
[FASTER GIFT FULFILMENT]
Get up to S$1,200 Cash via PayNow or attractive gifts like an Apple 13-inch MacBook Air (worth S$1,499) or an Apple iPhone 16e, 128GB (worth S$949) or an Apple Watch Series 10 42mm GPS (worth S$599) or an Apple iPad 10th Gen, 64GB (worth S$499) or Apple AirPods Pro 2 (worth S$349), in AS FAST AS 2-3 MONTHS when you apply for a min. loan of S$8,000! T&Cs apply.
PLUS enjoy promotional interest rates from 2.88% p.a. (EIR from 5.45% p.a.) and up to S$488 cashback (limited to first 500 new to GXS Flexiloan customers). Valid till 8 April 2025. T&Cs apply.
Which One to Tackle Your Debt Pile?
Got multiple outstanding payments piling up but unsure between personal loans or debt consolidation plans to resolve them? Read our guide to learn which option might solve your predicament better.
Frequently Asked Questions
How do payday loans work?
- A payday loan is also known as cash advance loans or salary loans in Singapore, which are short-term, high-cost loans with high interest rates that provide you with quick cash until your next paycheck.
Where can I get the best payday loans by banks in Singapore?
- This is sort of a tricky question, because while banks in Singapore do offer short-term credit options like cash lines or personal loans, they don’t offer “payday loans”. Available credit lines include DBS Cashline, UOB CashPlus, and OCBC ExtraCash.
Since payday loans are more high-risk and short-term in nature, they are usually offered by licensed moneylenders instead. Are payday loans better than personal loans?
- Yes and no. It really depends on your loan needs and financial capability.
Payday loans are usually small, short-term loans with tenures ranging from a few weeks to a month long or more and high interest rates while personal loans offer lower interest rates and are more long term for aspects like home loans, car loans, education loans, renovation or business loans. Can I use a payday loan for my home loan and car loan?
It is unlikely that you can use a payday loan to pay off your home or car repayments. Payday loans are usually for small amounts but home loans and car loans often entail huge amounts.
Is there a difference between a payday loan and personal loan?
- Yes, there are many differences between these two. They differ in terms of interest rates, maximum loan amounts and terms, credit check and eligibility requirements, repayment periods and terms, as well as the loan approval time.
How do I consolidate my payday loans?
- Payday loan consolidation involves combining multiple existing payday loans into a single personal loan, allowing borrowers to repay the total amount through manageable monthly installments at a lower interest rate.
In Singapore, merging various unsecured debts like these can be done through debt consolidation plans. How to pay off multiple payday loans?
- Once you consolidate your outstanding payday loan repayments, you’ll only need to make a single monthly payment towards your new personal loan. To stay on track with your repayment schedule, consider cutting back on non-essential expenses, monitor your income closely, and set aside a fixed portion of your income each month to avoid missing payments.