Where To Get A Short Term Loan In Singapore
February 11, 2023
Whether you need quick cash to cover unexpected expenses or a loan to take your business to the next level, short-term loans are an ideal solution.
With so many options available, it can be difficult to know which one is right for you. How do you know where to get a short term loan in Singapore?
In this article, we look at the different types of short-term loans available in Singapore, as well as their pros and cons.
Determine which types of lenders provide such loans and what their requirements are so that you can make an informed decision.
What Is A Short-Term Loan?
A short-term loan is a line of credit that you typically repay within a few months and has lower borrowing limits.
Most short-term loans are unsecured, meaning you will not need collateral when borrowing. Such loans can be helpful if you need extra money to cover unexpected expenses or if you need to bridge the gap between paychecks.
You can get a short-term loan within a day if you qualify. They have higher interest rates than longer-term loans, so it’s important to compare your options and find the best deal. Before signing on the dotted line, carefully read the terms and conditions.
Based on the lender, short term loans are also known as payday loans, cash advances, short loans, payday advances, or payroll advances.
Pros And Cons Of A Short-Term Loan
Short-term loans are a convenient way to get quick cash, but you should be aware of the pros and cons before taking one out. Here are the pros and cons of short-term loans.
Short-term loans are more convenient when you need cash urgently, as they have more lenient requirements and credit checks. In addition, the application process is simple and quick, making it easier to get a loan.
They also don’t require collateral, so there is no risk of losing your asset in case you run into headwinds.
Most lenders who offer short term loans make them accessible, making it easy to apply for the loan.
With advancements in technology, most lenders offer their short-term applications online. This makes it easier to access the loans at any time.
Licensed money lenders require the borrower to visit their premises for verification before they get the loan. Face-to-face identity confirmation minimises identity theft and other forms of fraud.
Flexible Repayment Terms
Short terms are mostly customised to suit the needs of the borrower.
The borrower can choose the amount and repayment period that suits them. Borrowers can choose a weekly, or monthly loan repayment period based on their needs.
Less Stringent Credit Checks
Most licensed lenders focus more on the borrower’s income when lending short-term loans than on their credit history. This means that even if your credit score is a little dented, there is a high chance you will get the short-term loan.
Less Overall Interest
As the name suggests, short-term loans have a tenure of fewer than 12 months. This means you will pay less interest in the long run.
Higher Interest Rates
Most lenders consider short-term loans a high-risk form of credit, and as a result, they charge a higher interest rate.
If you opt for a short-term loan, you will pay a higher interest rate. You must take the loan only when you are sure you can pay it back.
High Late Payment Penalties
Lenders will charge you a late penalty fee if you miss a payment. Short-term loans usually attract higher late penalty fees. It’s mostly a percentage of the outstanding amount plus administrative fees.
May Lead To A Rise In Loan Sharks
With more lenders offering their loans through the digital platform, there has been a rise in loan sharks in Singapore. It becomes hard to differentiate between a licensed lender and a loan shark.
It’s important that you verify whether a lender is licensed or not before you apply for a loan.
Easy Borrowing Becomes A Habit
Technology has made it even easier to access short term loans. If you are not careful, you can become a serial borrower, leading to money mismanagement.
For example, if you take a payday loan, there is a chance you will take the loan again in the months following.
Types Of Short-Term Loans In Singapore
There are many types of short-term loans available in Singapore. These include:
Emergency Cash Loans
Emergency cash loans are ideal for those who need cash urgently to cover unforeseen expenses such as hospital bills and car repairs, among others. For such loans, consider visiting licensed money lenders, as they are less stringent and their approval process is fast.
Also known as cash advance loans, payday loans are small, unsecured loans that you can access quickly. A payday loan is offered against your next paycheck and is often offered a few days or weeks before salary day.
Payday loans are a good option if you need money weeks before your salary hits your bank account. Before you take a payday loan, it’s important to ensure you can afford it.
A bridging loan is a type of short-term loan that you borrow when you are in the process of buying a new home and have not sold the old one. The bridging loan is mostly used to cover mortgage costs.
Consider taking a bridging loan if you need to buy a new home urgently.
When taking a bridge loan, you will need to provide collateral. Bridging loans are considered high-risk and, as a result, charge a higher interest rate.
Merchant Cash Advances
Merchant cash advances (MCAs) are short-term loans ideal for businesses with high credit card sales. The merchant cash advance allows you to get cash based on your sales. You do not need to put up any collateral, and the amount you can borrow is determined by the amount of credit card sales.
MCAs are a good option for businesses that are sure of their sales trajectory. It’s important to ensure that you can afford the payments. If your business’s sales are not guaranteed, a merchant cash advance should not be an option.
Line Of Credit
A line of credit offers the borrower a revolving facility where they can borrow, repay, and borrow again. The borrower is given a limit based on their ability to pay. Lines of credit provide a good option when you need to cover unexpected expenses.
Lines of credit have a higher limit than credit cards, low interest, and a higher loan limit. It’s important to note that when you access lines of credit, you
Where To Apply For A Short Term Loan In Singapore
If you need a short-term loan, there are plenty of options available in Singapore. Whether you need a loan for medical expenses, tuition fees, or any other emergency expenses, there are many different places you can turn to for help. Here are just a few of the many options available for short term loans in Singapore:
Licensed Money Lenders
Licensed money lenders are approved by the Monetary Authority of Singapore (MAS), and they adhere to strict lending guidelines as per the Money lenders Act.
Based on the act, the lender will lend you money depending on how much you earn. Based on your income level, here is what you can borrow.
|Borrower Annual Income||Singapore Citizen And Permanent Resident||Foreigners Residing In Singapore|
|Less than $10,000||$3,000||$500|
|Income between $10,000 to $20,000||S3,000||$3,000|
|At least $20,000||6x the monthly salary||6x the monthly income|
Licensed money lenders are allowed to charge interest up to 4% on the outstanding amount and not on the total debt. They are also allowed to charge a late penalty fee of up to 4%.
Banks offer short term loans at low interest. However, banks will consider your credit rating, and if your credit rating is poor, you may not qualify for the loan. Additionally, they take a longer time to approve the loan as compared to money lenders. If you need money urgently, banks may not be an option.
Private funders are allowed to lend money to accredited investors or companies.
They are excluded from following the regulations in the moneylending act, and they don’t require a license. They can lend to individuals with a net personal asset of $2 million, an income of not less than $300,000, and net financial assets of more than $1 million.
Private funders can lend to corporations with more net assets than $10 million. They may require collateral before they can lend you a short-term loan.
Find Out Where To Get A Short Term Loan
Short-term loans give you the money you need in a short amount of time. Research and choose the short term loan type that suits your needs.
It’s important to ensure you check for the best interest rates, repayment period, and loan tenure. Make sure you pay the loan as per the agreed timelines to avoid incurring penalties.
If you are looking for a short-term loan in Singapore, we recommend that you apply to GS Credit because of our fast approval procedure and good customer service.