payday loan interest rates

Guide To The Best Payday Loan Interest Rates In Singapore (2022)

Your current salary may be enough to cover your bills and expenses. But what happens if you’re faced with an unexpected expense? To make matters worse, your paycheck isn’t due for another few weeks.

Thankfully, there are licensed moneylenders that offer different loan options. One of them is the payday loan. Singaporeans may consider this option for emergency needs and personal expenses.

So what’s the catch? Interest rates may be ridiculously high. Taking on multiple payday loans can lead to further financial strain. That said, you should learn how to find the best payday loan interest rates in Singapore.


What is a Payday Loan?

As the name suggests, a payday loan in Singapore is a type of short-term, high-cost personal loan that you need to pay on or before your next payday. It’s like getting a cash advance in exchange for a high-interest rate and fees.

Payday loans are intended for short-term expenses, such as emergency expenses, medical bills, car repairs, or as a means to ease financial burdens until your next paycheck. This type of loan has fast processing times.

It’s easy to get a payday loan since most licensed moneylenders don’t check your credit score. They’ll only ask for proof of income to ensure that you’ll be receiving your salary soon.

However, a payday loan isn’t your only option. You can also consider getting a personal loan instead.


Payday Loans vs. Personal Loans

Payday Loans Personal Loans
You can only loan a small amount. Either the same amount as your salary or less Loan amounts differ. Depending on your monthly income, you can borrow up to six times your salary
It is usually an unsecured loan You can either get a secured or unsecured personal loan
Short loan tenure – two weeks to one month Repayment period can be up to 12 months


Personal loans are also easier to manage than payday loans. This is because it can be repaid over a longer period. You will have a payment schedule where the amount is divided into equal smaller amounts.

Best of all, with personal loans, you can borrow a bigger sum of money than a payday loan. Some lenders offer up to six times your monthly salary.


Payday Loan Features

1. Loan Amount

The amount you can borrow will be smaller than your monthly income. That said, you should not count on a payday loan to provide you with a significant amount of money anytime you need it.

2. Interest Rates

Interest rates will depend on the licensed payday lenders’ assessment and evaluation. However, according to the Ministry of Law website, the maximum interest rate a lender can charge is 4% per month. Additionally, the maximum rate of late interest is 4% per month for each month the loan is repaid late.

3. Repayment Period

Payday loans typically last a month or less. And you’ll have to pay it back in one lump sum when you receive your paycheck. This is a very short repayment period as compared to personal loans, where loan tenure can be as long as five years.

4. Other Charges and Fees

  • Late repayment fee: Not exceeding S$60
  • Processing fee: 10% of the principal loan amount
  • Legal fees ordered by the court for a successful claim by the moneylender for loan recovery.


Licensed payday lenders must not charge fees that will exceed the total principal amount of the loan.

For example, you’re taking out a loan of S$1,000.

Loan Amount Interest (4%) Processing Fee Total Cost of the Loan
S$1,000 $60 S$100 $1,160


Pros and Cons Of Payday Loans


  • Simple and fast approval process
  • No credit check. You can borrow money even if you have a bad credit score.
  • You can get immediate cash
  • No collateral required


  • Possibility of snowballing debt
  • Short loan tenure
  • Pay the loan in a lump sum
  • You can borrow as much as or less than your monthly income


How To Apply

You can apply for payday loans in Singapore through licensed payday lenders. However, make sure that you are dealing with a credible and accredited lender. Take a look at this list to find licensed payday lenders.


  • Must be at least 18 years old
  • For Singaporean / Permanent Resident: Minimum salary of S$1,500
  • For Foreigner: Minimum salary of S$2,000


Singaporean and Permanent Residents

  • Identity Card
  • Proof of residences such as utility bill, a letter addressed to you, or tenancy agreement
  • Proof of employment such as a recent 3 months payslip
  • SingPass password to log into CPF, HDB, IRAS website


  • Passport and Work Permit
  • Proof of residences such as utility bill or tenancy agreement
  • Proof of employment such as certificate of employment or recent 3 months payslip
  • Proof of income such as bank or account statement
  • SingPass password to log into IRAS website


If you’re borrowing a small amount, a licensed payday lender is an ideal choice. They offer personal loans, payday loans, and other loan products that will cover your needs.

You can visit a loan comparison website, like Instant Loan, to compare loan offers from top licensed moneylenders.

Apply in 3 easy steps:

1. Submit Loan Enquiry to Instant Loan: Submit your desired amount, your monthly income, and your desired interest rate.

2. Compare up to 3 loan offers: They can provide you with three competitive personal loan quotes for free.

3. Visit the recommended loan provider: Check out the most trustworthy licensed payday lender and apply online.

Just like banks, moneylenders will require you to submit a loan application with the necessary documentation. The total amount you can borrow, as well as your interest rates, will depend on the moneylender’s evaluation. Once approved, the licensed lender can deposit it to the borrower’s bank account or hand it personally.


Factors To Consider Before Getting A Payday Loan

1.Loan Amount

Determine how much you actually need. Decide if you can pay it back in the next two weeks or a month. A licensed payday lender will determine how much you can borrow based on your monthly income. However, the amount may be more than what you need. Just because you can borrow that much money doesn’t mean you should.

2. Interest Rates

As previously mentioned, licensed moneylenders can only charge up to a 4% interest rate per month. Be wary of payday lenders that charge interest rates that are higher than the standard.

3.Repayment Period

You may be relieved to finally receive the cash you need. However, you also need to consider the repayment schedule. Make sure that you’ll be able to meet the repayment period listed in the contract before you sign. Remember, licensed moneylenders can charge up to 4% late interest per month for every month you fail to repay payday loans.

4.Charges and Fees

Make sure you understand the charges and fees involved when borrowing from a licensed moneylender. Take these fees into account when deciding the amount you’re going to borrow.

5.Alternative Options

Have you tried other means to make or borrow a bit of cash?

Taking out a payday loan can lead to interest payments of up to 4%. Plus, you’ll have to pay it back within a month or on your next paycheck. Failing to do so will lead to more financial strains. So consider alternative options before taking out a payday loan.

  • Family or Friends: Although borrowing from people in your network isn’t a fun conversation, it’s better than taking on expensive debt. However, make sure to create an official agreement to pay back the amount you borrowed.
  • Ask For A Cash Advance: If borrowing from family and friends isn’t an option, consider approaching your employer. Ask if you can get a payday advance. This way, you won’t have to take on expensive debt.
  • Sell Your Belongings For Cash: Another option is to sell things you no longer use to get the cash you need. Do you have clothes that no longer fit you? Put them up for sale to earn a bit of cash.
  • Personal Loans: Instead of a payday loan with a short loan tenure, why not take out a personal loan instead? With personal loans, you can borrow up to 6x your salary, and the repayment duration is longer- up to 12 months if from licensed moneylenders.
  • Credit Card: Another option is to use your credit card to purchase something or pay for something. With a credit card, you’ll only be charged interest if you fail to pay the bill on time. So if you manage to pay it before the due date, you can get away scot-free.


Other Things You Need To Know

1.Do Payday Loans Have High or Low Fees?

According to the regulations set by the Ministry of Law, all licensed moneylenders in Singapore are only allowed to charge the following fees:

  • Late repayment fee: Not exceeding S$60
  • Processing fee: 10% of the principal loan amount
  • Legal fees ordered by the court for a successful claim by the moneylender for loan recovery.

2.How Do I Verify If A Moneylender Is Licensed?

You can find a list of all licensed moneylenders on the Ministry of Law website. So before you contact any payday lending business, it’s best to verify their credibility. If they are not on the list, there’s a huge risk that they are loan sharks.

For a complete guide on choosing a licensed moneylender, visit the FAQ page of the Ministry of Law website.

3.Can I Still Take A Loan Even With a Low Credit Score?

Most licensed moneylenders will not solely consider your credit score upon application. That said, you don’t have to worry about having a bad credit score. However, payday lending businesses may ask for proof of employment and at least three months’ payslip as proof that you’ll be paid soon.

4.How Long Will It Take For My Loan To Be Approved?

Borrowing from banks may take a few days to several weeks. This is because banks are stringent with their application process. If you borrow from a licensed moneylender, on the other hand, you may get cash between 30 minutes to an hour. Make sure to prepare requirements beforehand for faster loan processing.

5.What Happens If I Can’t Repay On Time?

If you can’t repay your payday loan on time, it will snowball into a larger amount. You may have a harder time paying it back because the interest will keep piling.

That said, make sure that you can pay the loan before signing the contract. If you are unable to do so for some reason, contact your payday lender to work out a better way to pay off your loan.

Another option is to consolidate your loan by taking out a personal loan. A personal loan will have a longer loan tenure. Additionally, your loan amount will be divided into smaller chunks per month which may be more affordable.



Key Takeaway:

  • Payday loans are short-term, high-interest loans that need to be repaid in two weeks or on your next payday.
  • Payday loans are typically based on your monthly salary.
  • You can consider taking out a personal loan instead of a payday loan since it has a longer loan tenure, and you can pay off your debt in installments.

Before you sign a payday loan contract, make sure that you choose the right loan from the very beginning. Take your time researching the best loan terms beforehand. Request up to three loan quotes from Instant Loan for free. They have up-to-date information about the top licensed moneylenders in Singapore so that you can find the best deals.


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