Young Asian businessman considering personal loans and payday loans from registered moneylenders in Singapore

Personal Loan vs Payday Loan: The Complete Comparison List

5 min

When you find yourself in need of quick funds in Singapore, what loan options do you have?

Among the common choices are payday loans and personal loans offered by licensed moneylenders. In this article, we will compare these two options, empowering you to make an informed decision based on your circumstances.

So, what is a payday loan?

A payday loan from a licensed moneylender is a short-term loan in Singapore that gives you quick access to money when you need it. These loans are typically based on your income proof, like your salary. They are convenient for urgent financial needs and have a simple application process with fast approvals.

Payday loans are meant to be repaid in full, including any interest or fees, on your next payday. They are useful for handling unexpected expenses or emergencies, but they are usually for smaller amounts. If you need a larger loan or more time to repay, a personal loan might be a better choice.

It’s important to note that payday loans are exclusively offered by licensed moneylenders and not by banks.

What is a personal loan from a licensed moneylender?

A personal loan from a licensed moneylender is a type of loan that can be obtained quickly during emergencies. It is usually an unsecured loan, meaning you don’t need to provide collateral, and it is available for a longer term. You can obtain a personal loan from either a bank or a licensed moneylender, but in this article, we focus on licensed moneylenders.

To qualify for a personal loan from licensed moneylenders, you typically need to provide proof of your income. Unlike banks, licensed moneylenders are more flexible – you can get a loan even with a poor credit score. However, the interest rate for a personal loan from licensed moneylenders is generally higher than those from banks.

One advantage of personal loans is that they have a fixed interest rate, which is usually lower than the interest rates charged on credit card advances. The repayment period for personal loans can be spread over a year or longer, depending on the loan term you choose.

Comparison of payday loans and personal loans from licensed moneylenders

Which loan should you apply for? Here’s a comparison between payday loans and personal loans from licensed moneylenders to help you in making an informed decision.

Two Asian women engaged in a conversation, discussing payday loans and personal loans provided by licensed moneylenders

Ease of approval

Payday loans generally have a simpler and quicker approval process. Licensed moneylenders who offer payday loans are typically more lenient, making them accessible to a wide range of borrowers. The primary requirement for a payday loan is proof that the borrower can repay the loan on their next payday.

In contrast, personal loans from registered moneylenders may involve additional document requirements and verification steps, which can potentially lengthen the approval timeline.

Interest rate

You will most likely find the interest rate for a payday loan to be higher than a personal loan.

Interest rates on a payday loan are dependent on the assessment of the moneylender you are borrowing from. However, the highest interest rate moneylenders can levy is 4% per month and the highest late interest charges are 4% per month for every month the loan is repaid late.

Income requirement

Personal loans rely on your annual income or bank account statements as criteria for approval, while payday loans are based on your monthly salary. As a result, personal loans offer the potential for higher loan amounts compared to payday loans.

Option for joint application

Many personal loan lending companies provide the option for joint applications, allowing family members such as siblings, parents, or spouses to become co-borrowers. On the other hand, payday loans only permit a single loan applicant.

By applying jointly, your loan application can showcase higher annual income and potentially offset any poor credit ratings. This can increase your chances of securing a larger loan amount through a joint loan application.

Repayment duration

Payday loans need to be repaid with your next paycheck, whereas personal loans have a longer tenure of up to a year.

In the table below, we have listed the key differences between payday loans and personal loans.

Payday loan vs personal loan comparison table

Which one is better? A payday loan or a personal loan from a licensed moneylender?

To choose between the two options, you may need to explore different factors or circumstances.

How fast can you repay?

Ask yourself if you can repay the payday loan in its entirety on the next payday. If you have any doubts, it is perhaps better to choose a personal loan and leverage the benefits of a longer repayment schedule and avoid the risk of defaulting on the loan.

When do you need the money?

Deciding which one is better depends largely on your time constraints. If you need the money very quickly, then, it may be better to avail of a payday loan.

Applications for payday loans get executed more quickly than personal loans. Payday loans are easier to apply for and processing is done quickly. So, payday loans are fit for those whose requirements need immediate consideration.

How much do you need?

If your loan quota requirement is higher than what can be considered your monthly income, then a payday loan might not be the best option for you.

In general, personal loans from licensed moneylenders allow you to borrow larger amounts of money compared to payday loans. However, it’s important to note that there is still a maximum borrowing limit across all licensed moneylenders in Singapore. This limit is determined based on your annual income and residency status. It’s crucial to be aware of this limit when considering your borrowing options.

Making informed decisions and borrowing responsibly

When choosing a loan that suits your situation, make sure to borrow only what you need and can afford to pay back. Avoid getting stuck in a cycle of debt. Remember to plan for repayment as you consider your loan application. If you’re not sure, take the time to understand the types of loans you qualify for before deciding. It’s always prudent to seek professional advice.

At Cash Direct, we offer quick and convenient loan options. Apply today and our loan advisor will assist you throughout the process, making it straightforward and tailored to your requirements. Whether you’re considering a payday loan or a personal loan, we’re here to help you find the right solution for your needs.


The information provided on our website is for educational and informational purposes only and is not intended to be a substitute for legal or financial advice. While we try to ensure that information on this website is accurate, we do not warrant that the information will be free from error. We shall not be liable for any loss or damage that may arise from the use of this website.

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