When you are strapped for cash and you do not have any means to cover your daily expenses, taking out a loan is your best bet. However, loans are not created equal. This is why it is imperative to do personal research so you can make a sound decision.
There are eight types of loans to explore: unsecured personal loans, secured personal loans, payday loans, title loans, pawn shop loans, payday alternative loans, home equity loans, and credit card cash advances. These loans can give you access to instant cash when you need it most. It is important to weigh your loan options so you can make a wise decision.
What are the Different Types of Loans?
1. Personal Loan
Most personal loans require putting collateral to get your application approved, but an unsecured loan does not require it. If you want to repay your debt, an unsecured loan is an ideal option for you because it enables you to consolidate your debt, especially if you need to settle a high-interest credit card debt. A personal loan’s interest rate will depend on your credit. This loan is also ideal for financing a home improvement project, moving expenses or medical bills.
Eligibility and Requirements
Local and Permanent Residents
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- Minimum Salary SGD 2,000
- Identity card
- Proof of residence (utility bill, a letter addressed to you, and or tenancy agreement)
- Proof of employment (certificate of employment if your job is less than 3 months)
- Recent 3 months payslip
- SingPass (to log into CPF, HDB, IRAS website)
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Foreigners
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- Minimum Salary SGD 3,000
- Passport
- Work permit / S Pass / E Pass
- Proof of residence (utility bill or tenancy agreement)
- Proof of employment (certificate of employment if your job is less than 3 months)
- Recent 3 months payslip
- Proof of income (bank or account statement)
- SingPass (to log into IRAS website
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Secured Personal Loans
A secured personal loan requires a type of collateral like a certificate of deposit or a car to get approved. Since the collateral gives lenders security, the interest rates are much lower than in unsecured personal loans. In the event you default on your loan, the collateral will back up your loan.Eligibility and Requirement
Just like an Unsecured Loan, eligibility and requirements are the same. But one major difference is that it requires a collateral in applying for the loan. When taking out a secured personal loan, you have to make sure that you will be able to repay the amount over a given period or you will run the risk of losing your asset. The lender has the right to seize your savings or car if you failed to repay the money you owed. Some borrowers are unable to recover from debt because of high-interest rates.
When loan sharks present themselves as licensed money lenders especially with incredible low-interest rate loans, then you may end up losing your assets. Loan Advisor will help you choose the right moneylender for your needs. You can have peace of mind if the lender is licensed, experienced, and has positive reviews. Check out here for the Ultimate Guide on borrowing from Licensed Money Lender in Singapore.
Secured vs Unsecured Personal Loans
Below are the major differences between Secured Loans and Unsecured Loans:
| Secured Loans | Unsecured Loans |
|---|---|
| Requires pledging property as collateral | Higher interest rates |
| Assets will be used as a backup for unpaid loans | Offering assets as collateral is not required |
| If collateral does not have the same value as the loan amount, the borrower needs to offer more assets or pay the outstanding loan amount | Personal lines of credit, credit cards and overdraft are examples of unsecured loans. |
| Housing or car loans are examples of secured loans | – |
2. Payday Loans
As what the name implies, payday loans are a type of short-term personal loans that you need to repay by next payday. The loan amount, fees and other payment terms will depend on where you live. Writing a post-dated check or authorizing a lender to take out the amount owed is necessary to repay the loan. Payday loans are ideal for emergency situations.
Eligibility and Requirement
Local and Permanent Residents
- Minimum Salary SGD 2,000
- Identity card
- Proof of residence (utility bill, a letter addressed to you, and or tenancy agreement)
- Proof of employment (certificate of employment if your job is less than 3 months)
- Recent 3 months payslip
- SingPass (to log into CPF, HDB, IRAS website)
Foreigner
- Minimum Salary SGD 3,000
- Passport
- Work Permit
- Proof of residence (utility bill or tenancy agreement)
- Proof of employment (certificate of employment if your job is less than 3 months)
- Recent 3 months payslip
- Proof of income (bank or account statement)
- SingPass (to log into IRAS website)
If you are looking for payday loan providers in Singapore with an easy application process, high approval rates and low interest rates and repayment fees, Loan Advisor will help you choose the best option.
3. Renovation Loans
This is the type of loan intended for fixing up a home. It can be in a form of mortgages, but before your loan gets approved, you need to provide proof that the money will be spent on home renovation.
Eligibility and Requirement
- You’re a Singaporean national or a permanent resident of Singapore.
- You are above the age of 21.
- You earn at least $24,000 per year. If making a joint application, the income of all applicants will be considered as a whole
- Require copy of quotation / invoice from contractors
Only the owner of the property is qualified for this loan and you must also be within the allowable income threshold. Saving up for a renovation project is necessary so things go as planned. However, there are instances when money is tight and you need to find another source to fund your project
This is where a renovation loan comes in, but they are not created equal. You can spend as much as $100,000 for a renovation depending on what you are trying to accomplish. Loan Advisor will make it easier for you to take up a Renovation Loan from banks or moneylenders.
4. SME Business Loans
An SME loan gets you covered when planning to launch a startup or expanding your company. If you are unable to pay for the expenses in growing your business, a business loan will serve as a borrowed capital.
Types of SME Loans
1. Secured and Unsecured Business Loans
For secured loans, the borrower needs to submit a form of collateral, which will be used as a security in the event of missed payment. An unsecured loan, on the other hand will not require a collateral, but the lender will be charged a much higher interest because of the risk involved.
2. Peer-To-Peer Lending
This is also referred to as P2P and this form of business loan is considered as an alternative for companies that are planning to finance a startup business.
3. Revenue-Based Finance Loan System
The revenue-based financing is a traditional type of SME loan and also the most convenient, especially if you are a small business owner. With this loan, you will need to repay a certain percentage of your sales each month until your loan is fully paid.
4. Specialist Business Loan
The loan prioritizes those with specific needs such as buying a car. When considering this form of loan, the lender needs to be clearly specific on how the funds will be used.
5. Loans For Young Entrepreneurs
Even young entrepreneurs from 21 to 30 years old can also take advantage of this business loan to boost their funds.
Eligibility
- Business must registered in Singapore
- Business must at least operational for 1 year
- Minimum turnover of $60,000 per year
Document Requirement
- All directors and partners NRIC
- Recent information report (Business Profile) from the Accounting & Corporate
- Regulatory Authority (ACRA)
- Recent Income tax assessment notice (both personal & from the company)
- Recent financial statement
- Recent invoices or business contracts
- Recent utility bills under the company name
- Recent 6 months bank statements
- List of assets owned by the company, directors & partners (if any)
- Office / shop tenancy agreement (if any)
When you apply for a Business Loan, you have to secure business and personal bank statements, business and personal tax returns, collateral documents and other documents that the lender may require.
5. Foreigner Loan
The loan, as the name implies, is a type of personal loan for foreigners. Like personal loans, foreigner loans are also unsecured loans so the interest is higher than secured loans. A foreigner loan can be used to cover rental deposits, buy a car or fund your education.
Eligibility and Requirement
- Minimum Monthly Salary SGD2,000
- Passport
- Work permit / S Pass / Employment Pass
- Proof of residence (utility bill or tenancy agreement)
- Proof of employment (certificate of employment if your job is less than 3 months)
- Recent 3 months payslip
- Proof of income (bank or account statement)
- SingPass (to log into IRAS website)
So if you’re a foreigner looking for the best foreigner loan from licensed money lenders. Worry not, Loan Advisor will help you get the best Foreigner Loans.
6. Bridging Loan
A bridging loan is considered as a short-term loan that moneylenders and banks offer alongside a home loan. If you are waiting for your property to be sold, you can apply for a bridging loan for purchasing a new home. In Singapore, bridging loans can help you buy a private property or HDB flats
This loan is only a temporary solution, especially if you do not have enough funds, but it can still help you cover your expenses. Even though used interchangeably, a home equity loan differs from bridging loan. With a bridging loan, you are waiting for your home to be sold before you could pay off the money owed.
A home equity loan, however, will require you to set some money aside for your loan before you can sell your property.
Eligibility
- 21 year old and above
- Min $2,000 salary
- Exercised the Option to Purchase(OTP)
Documents Requirement
- Identity card
- Proof of residence (utility bill, a letter addressed to you, and or tenancy agreement)
- Proof of employment (certificate of employment if your job is less than 3 months)
- Recent 3 months payslip
- SingPass (to log into CPF, HDB, IRAS website)
- Copy of “Option to Purchase”(OTP)
You will need to check if you match the criteria before you could apply for a bridging loan. You will need to have a stable income to qualify because it is a way for lenders to tell if you can pay the loan on the prescribed period.
Loan Advisor can help you shop for the best Bridging Loan from the best money lenders in the market.
Conclusion
In times of need, you have to consider a moneylender that will help you recover from your financial struggles. Whether it is paying your monthly bills or buying office equipment, nothing is more painful than getting a loan that is going to be detrimental in the long run. Do your research first so you will have an idea of the available options to explore.
Loan Advisor is your lifesaver in times of need. They are a one-stop-shop for your loan needs. Reach out to them so you can make the right choice. They will compare various moneylenders for you so you can have the smartest financial decision. As your advisor, Loan Advisor will lay down all of the available options and narrow down the selection based on what works best for you.
Loan Advisor is ready to assist you with any questions you may have regarding payday loans, renovation loan, foreigner loan, business loan or bridging loan.
