In life, emergencies come uninvited, and you might find yourself in urgent need of financial help. During such situations, short-term loans come to your rescue.
They are multiple types of such financial aid and various financial sources provide short-term loans with varying interest rates.
In this complete guide, we’ll discuss the basics of short-term loans and where to get a short term loan in Singapore.
What Is A Short-Term Loan?
A short-term loan is a type of credit scheme that allows individuals to borrow money for financial emergencies.
Typically, in this type of loan, the borrower returns the exact capital with the interest rates within 12 months of loaning.
Short-term loans primarily benefit those who want to run a business but don’t have the proper qualifications to pursue a bank and borrow money.
This ideal credit scheme is also suitable for anyone who wants an immediate cash influx for commercial or personal needs. Moreover, you can borrow an amount ranging between $100 to $100,000.
In Singapore, several reliable sources are available from where to get a short term loan.
Remember that not all money lending institutions have the same terms and conditions of the loan. They depend on the agreement between borrowers and the bank or licensed money lenders.
Pros And Cons Of Short-Term Loans In Singapore
Before opting for any short-term loan, it’s wise to be aware of the advantages and disadvantages of this loan type. From that, you’d know if it suits your risk capacity.
Pros Of Short-Term Loans
The advantages of a short-term loan are:
1. Lenient Credit Check
In the case of short-term loans, the credit qualification is not strict, thus making it easier for anyone to apply. The loan terms don’t demand any collateral, which means the borrower isn’t at risk of losing an asset.
A few licensed money lenders offer a quick application process, and the approval gets sanctioned within a day. It’s convenient for borrowers who need urgent cash inflow.
2. Flexible Loan Conditions
Unlike any other loan schemes, short-term loan conditions are flexible. Money lenders focus more on the borrower’s annual income than the credit score. That means you can apply for short-term loans despite poor credit scores.
3. Easy Repayment Conditions
Short-term loans cater to a borrower’s every plan, which makes a few loan terms negotiable. Whether it’s the loan amount or the interest rate, you can fix it upon a discussion with the money lending agent. You are at liberty to pay instalments within the definite time frame, as per your convenience.
4. Smooth Accessibility
In Singapore, choosing short-term loans has become more accessible, with licensed money lenders going digital. That way, a loanee can swiftly file their loan application whenever in need.
However, if you have borrowed from a licensed money lender, you must visit them for face-to-face verification. It’s necessary to prevent identity fraud, and the lender can discuss the contract terms with you.
Cons Of Short-Term Loans
Some of the drawbacks of short-term loans are:
1. High Interest
Even though short-term loans come with multiple conveniences, their interests are higher than long-term loans. It’s because this credit system offers a shorter repayment duration and demands you to pay heavy interest.
2. Dangers Of Loan Sharks
Applying for short-term loan schemes online gives loan sharks opportunities to trap potential borrowers in their malicious strategy. Also, borrowers can hardly differentiate between legal money lenders and loan sharks on digital platforms. This increases the chances of fraud.
Illegal money lending agencies offer lucrative loan plans with higher interest rates and hidden fees. Borrowing from such agencies can be problematic. Every debtor should look through their details before signing the agreement.
What Are The Types Of Short-Term Loans In Singapore?
Four short-term loan types are available, from which you can borrow money legally. Each of these types aims to satisfy the client’s specific financial needs. They are:
1. Payday Loans
People with poor credit ratings can apply for payday loans. It’s an obvious choice if you’ve to meet unexpected expenditures or other financial needs.
Borrow quick money from a payday loan with a post-dated cheque. In simpler terms, you give the bank or licensed money lenders a cheque with the date of your salary day mentioned. After you get the capital, the bank will deduct the principal amount and the interest on the salary date from your bank account.
2. Invoice Financing
Also known as ‘account receivable financing’, this type of credit transaction allows commercial personnel to borrow money with invoices from customers. It’s appropriate for business owners who need immediate financial help for commercial purposes.
On submitting the invoices, the bank or other financial agencies pay 80% of the invoice. In exchange, the customer will have to return the principal amount and interest rate on the stipulated day.
3. Merchant Cash Advance
Technically, it’s not a loan type but more of a cash advance. When small business owners don’t qualify for bank loans, they opt for merchant cash advance schemes.
In such financial deals, you get monetary help from banks and money lenders in exchange for credit or debit card future sales. The lender deposits the money to the bank account instantly.
Though the interest rates are higher than other short-term loan types, small businesses find it beneficial because of the varied opportunities that financial institutions provide. If an individual applies for a merchant cash advance, the money lender claims it as a loan. They decide on a stipulated date by which the borrowers repay the total amount, including interest rates.
4. Line of Credit
It functions more like your usual credit card. Debtors can avail of this loan up to a definite limit. It depends upon various factors, like your source of income, monthly payment, and more. After the bank or money lending agency approves the loan request, borrowers can decide on the instalments.
Where To Get A Short Term Loan In Singapore
If you’re wondering where to get a short term loan in Singapore, here’s a list of financial sources that suit your query:
Banks are one of the safest places providing short-term loans at a low-interest rate. Unlike licensed money lenders, banks pay attention to your credit score and take a long time before sanctioning your loan request.
Moreover, if debtors have a low credit score, it can reduce their chances of a minimum interest rate. Also, banks can’t be an appropriate option when you have a sudden cash crunch.
● Licensed Money Lenders
In Singapore, there are approximately 156 money lenders. Each of them is under the constant supervision of the Ministry of Law.
The government regulates the amount money lenders can offer and the rate of interest they can charge.
Therefore, a prospective borrower can expect secured loans from licensed money lenders under government control. They offer quick services and negotiable contract terms. You can visit reliable money lenders like CreditMaster and check their requirements.
● Private Funders
The third source of financial help can come from private funders. The Moneylenders Act excludes them and doesn’t allow them to hold a license. They can lend money only to accredited investors or organisations.
The potential individual borrower must fulfil either of the following criteria:
- Net personal assets should exceed $2 million, while the primary residence valuation shouldn’t exceed $1 million.
- Annual income in the preceding 12 months shouldn’t exceed $300,000.
- Net financial assets exceed $1 million.
If you represent a corporation, your net asset should have at least a $10 million valuation.
Borrowers can seek monetary help from private funders if they satisfy either of the categories. In that case, the loanee needs to present collateral. They can lose assets if they fail to repay on time.
How To Choose The Best Short-Term Loan In Singapore
Before reaching a decision, a borrower must compare the interest rates and conditions of different financial institutions. Here are a few options for how you can get information about short-term loans:
● Loan Comparison Site
Several online platforms can give comparable data on various lending agencies. They include loan availability, the interest rate and the minimum and maximum amount you can draw. Browse through this information; you’ll know which loan to opt for.
● Licensed Money Lenders
In emergencies, it’s wise to reach out to licensed money lenders for help. Not only do you have to do minimum paperwork, but you can also avail of your loan soon.
If you’re unsure which money lending agency to approach, you can apply here and try CreditMaster for its efficient service.
Eligibility To Apply For Short-Term Loans
Here we have listed the basic requirements financial organisations ask for:
- Filled in loan application form and agreement
- Bank statement
- Income proof
- Valid ID proof
- Residency proof (in case of foreigners)
Note: If you’re filling out the loan application online, they would want to ensure that you’re 21 years of age with a steady source of income.
Licensed Money Lenders Can Get You the Best Short-Term Loans
Short-term loans are helpful when you’re in dire need. Wasting time waiting for loan confirmation is never an option when you’ve got a medical, family, or business emergency.
In these circumstances, a quick cash injection can relieve you of anxiety. Licensed money lenders in Singapore can provide similar services.
You can receive the desired capital on the spot with less paperwork and necessary documentation.
Moreover, they discuss the merits and demerits of contracts with the customer in detail. The agreement is made only when both parties are satisfied.