An urgent loan, also known as an emergency loan, is a loan that is used to cover expenses that need to be taken care of immediately. Normally, urgent loans do not require collateral. However, they are dependent on the credit score of the borrower, as well as the borrower’s ability to pay the monthly payments.
Reasons why you need an emergency loan
In this section, we will discuss some of the most prominent reasons why people take emergency loans.
1. An unexpected loss of Income Source
Losing your source of income, such as a job, or having a bad financial situation for your business can happen at times. There is no way that people can predict such things will happen. This is especially highlighted in the global pandemic that the world is going through right now. People are losing their jobs left and right through entrenchment, and some businesses are declaring bankruptcies altogether.
However, even without a pandemic, unexpected job loss still occurs. Companies normally reduce the number of their workers to cut costs, leaving some of their workers without a job all of a sudden. That’s one of the main reasons why people needs fast cash or urgent loan, but during these tough applying for fast loans Singapore can be quite difficult as well. So its always ideal to have a good credit history, since bad credit score can avoid you from getting an urgent loan.
2. Emergency medical expenses
There is no way that you can completely prevent having emergency expenses regarding your health, no matter how careful you are or how healthy your lifestyle is. You can get involved in an accident that you have no control of. A loved one might be hospitalized for whatever reason. If you don’t have enough money saved for a particular emergency expense, or your emergency fund is not enough (hospital bills can quickly rack up,) an urgent loan might just be the solution to your problem.
Such medical emergencies can put you at risk of getting an urgent loan in spite of having interest rates on top of these urgent loans, this trying situation makes you grab them.
3. Emergency expenses in general
Aside from medical emergency expenses, there are also expenses that are not related to your health, but are nonetheless still urgent.
For example, your car might require a costly repair, and you cannot go to work without a car. You need to take care of this emergency expense, or you run the risk of being fired from your work (which leads to unexpected loss of source of income, as stated above.)
When this sudden emergency arises, an urgent loan is a quick solution to your dilemma. You need to remember that each urgent loan like a pawnshop loan incurs interest rates and other fees, the financial agency will also look into your credit history and if you have bad credit standing then you might not be able to apply for one.
4. Natural disasters
Another emergency expense that you cannot completely prevent is the occurence of natural disasters. A typhoon might wreck your house, leaving it exposed to the elements. When that happens, you should repair it immediately to avoid further damages to your property. If you have no money, that can be taken care of with an urgent loan.
5. Debt consolidation
If you have taken a lot of smaller loans that are close to earning penalties, you might want to pay them using another loan. This process is known as debt consolidation, which can come in handy if your other loans will soon earn additional interests and late payment penalties.
When you are trying to consolidate your debt, an urgent loan can matter most in terms of avoiding high interest rates and other fees so that your debt doesn’t turn into a massive debt cycle. what to know more about debt consolidation? Check out what is debt consolidation plan and how does it work.
Different types of urgent loan
Personal loans are unsecured loans taken from banks, licensed moneylenders or credit unions. They are payable in monthly installments, with the loan duration varying from 1 year to 5 years. Licensed Money lenders offer this kind of urgent loan, and loan officers are the ones to guide you on the urgent loan process. Personal loans are suited for big expenses that cannot be covered by payday urgent loan, which are quite limited when it comes to the maximum amount that one can borrow.
Personal loans have a higher upper limit on loan amounts, allowing them to cover most if not all of the major emergency expenses.
Personal loans use the credit standing like bad credit for instance and existing loans of an applicant to determine the maximum amount of loan that they can get. The majority of banks in Singapore are willing to lend a maximum of 4x your monthly salary as long as you meet their income requirement.
Pay day loans are unsecured loans that are associated with high-interest rates and debt traps. However, they are not as bad as they are portrayed, especially if you get yours from a reputable moneylender. This loan can come in a crutch since they are generally approved and faster compared to personal loans.
As stated above, this type of fast loan Singapore have a low maximum loan amount, so it is only suited for emergency expenses that are not that costly, or if you are using the loan to supplement an already existing fund for the expense.
In Singapore, the maximum amount that you can borrow with this type of loan depends on your annual income, which in turn is calculated using the total income that you received for the past 3 months before you submitted your loan application. Learn more about the benefits of payday loan you should know about before applying for one.
Credit Card – Cash Advance
In simple terms, a credit card cash advance is the term when you take out money against the credit line of your credit card. Instead of using your credit card to pay for purchases, you instead “withdraw” money from it similar to what you will do with an ATM machine. The total amount that will be available to you is dependent on your total credit line. Take note that some credit cards have a lower cash advance limit compared to the limit for using the card for typical purchases. Also, the amount that you can withdraw can be lower if you already used some of your credit line.
We do not recommend a credit card cash advance, if you are thinking of this as a form urgent loan, it’s always better if you can apply for a proper loan that has low interest rates. This is because the cost of withdrawing money from a credit card is rather high. You will be imposed with a cash advance fee, and the interest will be higher compared to the rate for normal transactions on the card. Also, since there is no grace period for a cash advance, interest rates start filling up on your balance as soon as you made the cash advance transaction.
Pawnshop loans are a quick way to get loan money, and it doesn’t have the long application process that traditional loans have. The lending institution providing the pawnshop loan as a form of urgent loan does not look at your credit score, which means that you can apply and get approved for a pawnshop loan even with a bad credit score.
However, a pawnshop loan comes with the risk of having to give up an item as collateral. Additionally, the total amount that you can get will be dependent on the value of the item that you will use as collateral. If the item that you will pawn is not worth much, the maximum loan amount that you can get is also quite low. Normally, pawn shop loans offer about 25% up to 60% of the resale amount of the collateral. If you fail to pay the loan once it is due, the loan provider has all the right to take possession of your item and sell it, as stated by the loan agreement.
All in all, use pawn shop loans with caution. After all, you are already in an emergency situation, and if your financial situation doesn’t improve by the time the pawnshop loan is due, you will lose the item used as collateral. Use pawn shop loans only if you don’t have any other options for getting emergency money.
Reasons why you should get a loan from a moneylender
In this section, we will discuss why it is better for most people to get their urgent loans from a licensed moneylender.
1. Fast application & process
Licensed moneylenders in Singapore are known for their fast and convenient loan application process. Reputable moneylenders have adapted to the internet, accepting online applications Applying for a loan is as easy as going to the website of the lending company and filling up an application form.
2. Low interest rate
Compared to taking out a credit card cash advance or transacting with loan sharks, loans from licensed moneylenders feature lower interest rates.
3. Minimal requirements
Compared to more traditional bank loans, personal loans have fewer requirements and qualifications. Even people with bad credit standing can have their loans approved, although you will get better interest rates if you have an excellent credit score. While we are on the subject of credit standing, let’s talk about improving your credit score with the help of taking out loans.
4. Repair credit score
There are people out there who take out personal loans for the sole purpose of repairing their credit score. Taking out a loan and paying it in good terms is a good way to increase your credit standing, and personal loans provide a fast and convenient way to do that. As long as you settle your monthly repayments before they are due, your credit standing will improve with the help of a loan from a licensed money lender.
Things to consider before applying for urgent loan
In this section, we will discuss some of the things that you need to know prior to applying for an emergency loan.
1. How much do you need?
This is probably the most important thing to consider before applying for a loan. Knowing exactly how much you need to borrow will allow you to determine what is the best loan type for you.
Even if you do not know the exact amount of what you’ll need for the urgent expense, it is good to have an estimated amount.
2. Your credit score
Your credit score will determine the amount that you can borrow in most loans used as an urgent loan. As such, having knowledge or even an estimate of your credit score is important. It will allow you to apply for the loan amount that you can realistically obtain.
3. Your repayment ability
After you decide on the amount that you will borrow, determine if you have the ability to repay it within the duration of the loan. It is important to avoid any possible late penalties. You are already in a tight position, you’ll not want to add more to your financial problems later down the line.
Search for urgent loans with help from Loan Advisor
When looking for a loan, it is important to find one that has low-interest rate, provides a favorable repayment schedule, and has a loan amount that fits your needs. However, you should also equally consider where you take out your loan from. The quality of the moneylender you transact with can make your life easier, or harder.
Quality of the money lender
When choosing a money lender, be sure that they are accredited and registered in MinLaw. Making sure that the lending institution you are dealing with has the proper licenses and accreditation is always recommended, as it guarantees that you are dealing with a good moneylender. However, to find the best money lender, you should go far beyond just checking licenses. This step will be discussed below.
Check reviews in websites like Google and Loan Advisor
It is quite easy for money lenders to register and comply with the law. However, it is not a guarantee that the moneylender provides excellent services. The best way to check if you are transacting with a reliable money lender is by checking their ratings on Google. Users frequently post about their experience on the Google page of the moneylender, and as such, you can read the reviews yourself. You should also check the reviews posted on Loan Advisor. 5-star reviews are a good indication of a reputable moneylender.
To get started with using Loan Advisor for deciding on your loans, you can get free quotes on this link.
What is Loan Advisor?
Basically, Loan Advisor is a website that allows the direct comparison of loans offered by different financial institutions. They provide advice to would-be loan takers by compiling all the relevant loan information and presenting it in a format that is easy to understand.
With Loan Advisor, you won’t have to go through the grueling task of getting the information on every loan from different loan providers yourself. With just a few clicks, you can get access to that same information compiled by professionals.