You can quickly find a short term loan in Singapore with a single search engine query. You’ve heard most customers who found success with a short term loan to have the convenience of quick approval and immediate payouts. This is greatly helpful in many situations, such as medical emergencies, accidents, or just to fill out a lacking amount for a certain huge payment.
However, you can’t just head to a bank or financial institution and get the first loan offer you receive. It pays to know about the different kinds of loan available in Singapore. Additionally, know more why it’s better than a long-term loan, and how you can get financing even with poor credit rating.
What is a Short Term Loan?
These are financial products that are quite small and manageable. Most of them will never go beyond 50% of your debt-to-income ratio. However, you’ll need to pay this financing for a shorter amount of time too.
A long-term loan can stretch for 1-5 years. However, short-term loans can be as quick as paying the entire financing upon the 30th day of its release.
Characteristics of a Short Term Loan
Short-term loans allow borrowers to receive small amounts than the usual loan amounts as quickly as possible. With collateral and equity unnecessary, the approval process for this financing is faster than a business or big-amount personal loan. In most cases, these term loans will require borrowers to pay their entire balance sheet within a year after the application approval.
However, similar to conventional financings, such as long-term loan, lenders will ask for documentation that establishes your cash flow and capability to repay your loan. One of these documents is your final offer letter for the position.
In Singapore, you can receive up to S$20,000. Banks can charge an interest rate higher than 4%. On the other hand, licensed moneylenders can set 4% as their maximum interest rate for financing.
Types of Loans Available in Singapore
Borrowers can have five types of fast loans in Singapore. A cash loan is similar to those available in other countries with interest rates and local exchange currencies, the only difference between the lump-sum you can receive.
Keep in mind that even the offers are convenient and make it easy to receive emergency financing, interest rates and penalties can increase your overall repayment amounts. When taking out cash loans, whether for business or personal use, make sure to consider if your debt-to-income ratio is still in the green.
1. Cash Advances for Sellers and Retailers
Banks consider this a cash advance rather than quick-pay financing. However, the loan amount you receive is similar to moneylender quick loan.
This financial product will allow lenders to access the borrower’s existing credit. In doing so, they have a full understanding of the companies’ financing, expenses, and income. The lender then takes a percentage out of every sale and profit of the lender concerning business activities.
Most banks require businesses to have a good credit rating. Therefore, if they’ve got a poor credit score, the establishment should take out additional financing to restore their credit score first.
2. Credit Line
These financial services function similarly to credit cards. Lenders will set a credit limit for the open line of credit. In doing so, banks can monitor the borrower’s financial activities. Automatically, the line of credit allows borrowers to pay in installments.
Many businesses find credit lines useful because of their lower annual percentage rate (APR) for financing that requires more years of payment. APR is similar to the interest rates of credit cards and other financing products. However, credit lines have lower interest than typical loans (which have high repayment amounts.
3. Payday Loan
You won’t need a good credit score to secure one quick payday financing from licensed moneylenders. However, you’ll need to establish that you can earn enough and have an excellent debt-to-income ratio to repay your dues by the end of the month.
In case you faced medical emergencies or sudden unplanned expenses, these quick-payout loans can be your saving grace to avoid penalties on your utilities and other regular monthly expenses. To know more about payday loans, be sure to check out Benefits Of Payday Loans You Should Know About.
4. Installment Loan
Many online retailers partner with Singaporean banks to provide online financing when purchasing high-value appliances, gadgets, and other items. If you have an existing credit card with the bank, you can use your card and get an installment plan for the item of your choice.
Some online platforms and service providers make it easy to get quick installment financing. However, make sure they’re not unscrupulous lenders. These unregulated individuals can change their policies at any time and trap you in debt.
5. Invoice Financing
This financing is specifically useful for small businesses. Banks provide a financing amount equal to all the business’ accounts receivables. The lender can intercept these invoices once clients have paid them, take their percentage as part of their agreement with borrowers, and leave the rest to the borrower.
Similar to credit lines, businesses will give banks full access to their accounts receivables and ledgers. In doing so, there is complete trust and transparency between the company and lender. The lender will have no say or recommendations in the company’s decisions despite having access to its financial accounts.
6. Personal Loan
When it comes to the best long-term loan, you won’t find it with moneylenders. However, if you need money in a pinch for any purpose, you can take quick-pay and approval financing from lenders.
Luckily, most moneylenders provide payday and modest personal financing products. This is enough to get you out of a financial rut with little interest. Once you’ve submitted all documents that establish your capability to pay, you can receive your unsecured financing. Be sure to check out what to consider before taking out a personal loan in Singapore for more information.
Advantages of a Short-Term Loan
Short term loans provide you with relatively low interest rates. Furthermore, because you’ll bypass collateral investigations synonymous with secured loans, you won’t need to think much about your application. For example, moneylenders who have established your income and credibility can release your loan on the same day.
Some Cons Are In Order
As the saying goes “the lower the risk, the lower the reward.” Short term loans have very lenient requirements and considerations because it can only offer a modest amount. If you need higher
How to Apply For a Short-Term Loan
1. Head To Your Local Bank or Moneylender
Visit your local bank or moneylender’s website. If you’re required to make an account, register one. Then, ensure that you’re the only one who knows your password.
2. Present Documentation That Supports Your Income and Expenses
Next, you’ll be asked to verify your personal information and details. Most lenders will ask for an identification card, documents to support your employment, payslips, recent billing statements, and others.
3. Receive Your Loan Amount
Unsecured short-term loans often get release notifications in less than a week. If not, your bank will alert you about additional documentation or inform you about your application’s failure in just a few days.
4. Get The Best Loans From Licensed Moneylenders
If you have yet to find a dependable lender that can provide you top-quality, fast loans Singapore, you can trust moneylenders to provide you with the best rates for all your needs. When you can, visit their websites or the branches nearest to you today.