When you need urgent cash and have to take out a personal loan, you must look for the right loan type to suit your financial needs. Once you have identified what your financial needs are, then you should research further to ensure that you get the best loan offer from legal moneylenders.
There are many different types of loans offered by licensed moneylenders in Singapore. Therefore, be sure you have the right definition and uses of the different loan types available in the Singaporean market.
Take time to shop around by visiting moneylenders to be familiar with the offers they have on their loan services. Even then being able to tell apart the different loan types and their uses will likely make your search for the best loan deal much easier. There is a lot of information available online about personal loans in Singapore.
With all this information it can be quite confusing when it comes to telling the difference between them.
Here is a breakdown that will help you understand better the different types of loans offered by licensed moneylenders that you can access.
Most personal loans are generally unsecured loans. This means you do not need to put up collateral or security when applying for this loan type. Personal loans are usually disbursed as a single lump sum.
This is the reason why personal loans are popular among Singaporeans. This is also why they are useful for any type of usage and especially when you are expected to make an urgent payment by cash. Some Singaporeans use this loan type to settle a huge medical bill, personal debts or even their credit card bills.
Repayments for personal loans are typically made monthly. Since this loan type is unsecured and is offered by licensed moneylenders, it, therefore, requires no collaterals. This means that the moneylender takes on a huge risk should a borrower default. It is for this reason, that the interests charged on the personal loans are generally higher than the loans taken using collateral. Some of the loans taken out using collateral include auto and mortgage loans.
For these loan types to be approved, most money lenders will have to check your income levels, the total loan amount you want to borrow as well as your credit history.
Payday loans are short-term unsecured loans often taken by people to cover rent, bills, as well as other everyday expenditures that can’t be put on hold pending the next payday. The most important difference between a personal loan and a payday loan is the loan amount. The payday loan amount is generally much smaller compared to that of a personal loan. It is for this reason that payday loans can be settled once you receive your paycheck.
Payday loans are normally short-term loans and are made available quickly. This also means the interests charged on them are a lot higher than those of personal loans. On the other hand, the advantage of this loan type is that when the amount of loan is reasonable and is less than your monthly salary, your application will likely be successful therefore be authorized.
Cash Advance or Instant Cash Loan
Instant cash loans are somewhat a blend of a payday loan and a personal loan. They let borrowers have access to a certain amount of loan money based on their level of income. The amount a person can take is usually between 2- 4 months of a borrower’s monthly income. This makes this loan almost accessible to anyone as long as you have to show proof of income. And at the same time, your credit score is not used when approving this loan type.
Instant cash loans attract high interests and are often used by individuals who are in urgent need of cash. An additional similar loan type is a cash advance. But, cash advances are often linked to a credit card. With this, you will have access to a loan totaling your credit limit.
This is a kind of an emergency fund that a borrower can draw upon when a financial need arises. This product is mainly offered by banks that will give you access to loan funds from anywhere, and at any time. You are often allowed to draw credit equal to 4 times the monthly salary. And you will only pay the interest charged on the funds you use.
The Interest rate is calculated every day, thus the interest rate amount you repay each year maybe about 20%. Considering the credit line has high interests, the account needs to be made use of only in an emergency and also when you are certain you can repay the loan amount within the shortest time possible.
Accessing a personal loan in Singapore for a foreigner may prove to be very difficult. You can imagine you have just arrived in Singapore, with no income statements and even having no credit history here. And with all this, you are expected to pay for different expenses, which include a deposit for the new rental home and also the purchase of new furniture.
Legal moneylenders in Singapore can offer you easy access to a foreigner loan. This is meant for foreigners who may not have access to bank loans due to their strict credit criteria.
For you to qualify for the foreigner loan, you need to have a valid work permit or employment pass. You may also be required to show proof of residence as some of the requirements you are to meet.
When you need urgent cash and have to take out a personal loan, you must look for the right loan type to fit your financial needs. Being able to tell apart the different loan types and their uses will certainly make your search for loan deal much easier.
There are various loan types available in Singapore. These are offered by Singapore’s licensed moneylenders and include Personal Loans, Payday loans, Foreigner loans, Instant cash loans, and Credit line.