If you have an emergency and know where to get a short term loan, you can sleep without worries. The loan can help and give you peace of mind since it offers a short and flexible repayment period.
While you can consider your problem solved once you discover where to get a short term loan, you need to take some precautions.
Ensure you know what a short-term loan is, the loan terms and the pros and cons, and the types of loans. With this information, you can get your term loan without issues.
What Is A Short Term Loan?
Wondering what a short term loan is? It is a form of credit you must pay within a short period, between six and 12 months.
Besides, they typically have lower loan amounts ranging from $500 to $35,000. Again, some lenders can allow you to borrow $100,000 or more, but you should take what you can pay comfortably to avoid issues once the loan is approved.
If that’s not enough, remember that short-term loans are mostly unsecured.
While many licensed money lenders commonly use ‘short term loan’ when referring to this type of credit, many others use different terms. The most common alternative names are payroll advances, fast loans, payroll loans, and cash advances.
Pros And Cons of A Short Term Loan
While short-term loans are designed to help you deal with emergencies easily, you must take some precautions. Before jumping to a conclusion, remember that each coin has two sides. In the same way, these loans have their unique pros and cons. Consider both sides before submitting your application.
Pros Of A Short Term Loan
- Lenient requirements and credit checks make getting a short term loan highly convenient and useful during emergencies.
- You can get credit at any time since there are many places where you can get a short term loan. Some financial institutions and licensed money lenders offer credit facilities that suit each of their borrowers’ unique needs.
- The short repayment period gives you peace of mind knowing you won’t be required to service the loan for years. Besides, it helps to reduce the amount of interest.
- Taking short term loans in Singapore is easy, no need for a good credit score or filling complex forms.
Cons Of Short Term Loans
- Have higher interest rates than mid- and long-term loans because of the shorter repayment duration.
- This loan opens a huge opportunity for loan sharks that want to make quick money. Most offer unfavourable terms, including sky-high interest rates and hidden fees.
- You often qualify for small amounts that depend on how you want to use the loan.
Short-Term Loans Available in Singapore
There are only five main types of short-term loans available in Singapore that the law allows you to opt for whenever you need financial support. So, before looking for where to get a short term loan or taking a loan, be sure you are acquainted with them. This way, you could easily identify a loan shark and opt for a loan that suits you.
Please find below the main types of short-term loans.
Short-Term Personal Loan
Many people use personal loans to pay expenses like medical bills, school fees, household purchases, and other expenses like home repair and utility bills.
These types of loans also differ from others such as housing or home loans since these options are designed for specific purposes, as their names imply.
At the same time, these kinds of loans are different from credit card payments. Why? They are paid in fixed-amount installments over a given duration. Moreover, the loan approval ratings are higher since money lenders evaluate creditworthiness.
When you apply for short term loans like this one, your lender won’t ask you to provide any collateral.
Since these fast loans have higher interest rates, they’re suitable on a short-term basis.
However, if you compare the cost of personal loans and most credit cards, you can see that personal loan interest rates are lower than these cards’. A few credit cards can offer more favourable payment terms, depending on the terms of the loan.
Since personal loans in Singapore typically have lower interest rates than credit cards, you can use them to consolidate multiple credit card debts. By combining the debts into one, you can lower the cost of monthly payments.
A bridging loan, also known as gap financing, is suitable for people or businesses needing urgent financial help while waiting for money from some sources. For example, if you’re purchasing a new home and want to use the proceeds from your current home that is not sold off yet, you can apply for a bridging loan for that purpose.
In this case, you can use this loan to cover the mortgages for the two homes.
Due to the high risk involved, bridging loans often incur higher fees and interests than many other options. At the same time, you can lose your personal or business collateral if you are not able to repay the loan.
However, these short term loans come with significant benefits, so you can go for them if you don’t want to miss a promising opportunity due to a lack of money.
A payday loan is another great option, especially if you have a low credit rating. It suits people who earn regularly but need quick money to fix some emergencies at a time when their payday is only a few days or weeks away. This could be the loan that you need if you’re ready to cover your unexpected expenses at a high cost.
Payday lenders take their money and interest directly from the bank on payday,
Because of the high interest rate and strict repayment procedure, you should take what you can afford to pay in time to shield yourself from driving into more expensive loans.
Invoice financing is a business credit you can get using your account receivables. In other words, in this case, you use what your customers owe to prove that you can service the credit facility as required.
Taking this loan usually involves invoice factoring, which refers to invoicing your clients and selling the invoice to the financial institution willing to give you the loan.
Once the process is complete, the financial institution gives you 80% of the invoice. It then waits for the invoice to mature and deducts its share when your customer pays. If there is an outstanding balance after the deduction, the institution sends it to you per the terms of your contract. So, take this loan if you’re ready to sell your invoices to the lender.
Line Of Credit
A line of credit is another option you can consider when facing cash flow problems. These short term loans tend to work like credit cards, though you don’t need to worry about credit card sales and the likes.
The lender sets your credit limit depending on factors like your credit score, how a loan is repaid or how you want to pay back, and source of income. Once you take this credit, the interest is levied on the advanced loan. So, you can see how a line of credit works like a credit card.
Where To Apply For Short Term Loans In Singapore
Now you can see that taking out a short term loan in Singapore is easy. You know their pros and cons, the types of short-term loans, and more.
Let’s now look at the main financial institutions that can offer you the best short term loan.
Banks are often the first option offering short term loans, allowing you to apply at any time.
The downside is that banks have stringent requirements. You can only get a loan with most banks if you have an active account with them and an excellent credit score.
Licensed Money Lenders
Money lenders have no problem with a low credit score, making them an excellent alternative source of credit in Singapore. Moreover, they can loan you huge amounts of money. According to Singapore’s Ministry of Law, you can get a secured loan of any amount from these non-bank institutions. Also, their loans are usually cheap.
Here is a table showing the amount you can borrow from these institutions based on your annual income.
|Borrower’s Annual Income
|Singaporeans And Permanent Residents
|Foreigners Residing In Singapore
|Between $10,000 and any amount less than $20,000
|$20,000 and above
|6x monthly income
|6x monthly income
Note that the law requires licensed money lenders in Singapore to impose no more than 4% per month regardless of any factors they may consider important at any time. It also states that lenders can only levy interest rates on the outstanding balance.
Besides, the law provides that you can’t be charged more than 4% monthly as late repayment interest. Better still, the act clarifies that this interest can only be levied on the amount the borrower is yet to pay.
The main downside is that money lenders are often slightly more expensive than banks. They charge higher interests to protect their capital.
Private lenders are another viable option that you can consider. The Moneylenders Act exempts them from holding licenses but allows them to lend money to accredited corporations and investors.
The qualifications of people and organisations that qualify to take out short-term loans with these funders are:
- An Individual
You qualify if your net personal assets exceed $2 million and the value of your primary residence doesn’t exceed $1 million. Or if your income in the preceding 12 months is at least $300,000. You also qualify if your Net Financial asset is valued at least $1 million.
- A Corporation
Corporations with assets worth more than $10 million also qualify.
Other Financial Institutions
Many other financial institutions in Singapore offer short-term loans, and you can consider them. We’ve already talked about loan from a financial institution like money lenders because of their special role in this industry.
If that’s not enough, and you still want to know where to get a short term loan, you can consider options like savings and loans associations, insurance companies, and credit unions.
These institutions give different types of loans. They also offer varying interest rates and have different terms and conditions.
So if you are interested in any of them, you can do more research on what they require and consider joining them as a member.
Get A Short-Term Loan In Singapore From Licensed Money Lenders
Banks and money lenders are Singapore’s most reliable source of short-term loans.
However, many people turn to money lenders since most banks have many stringent requirements, like an excellent credit score and an active savings account.
While there are a few other options, as we’ve seen here, this leaves licensed money lenders as the most reliable and convenient solution.
In short, if you have an emergency and are looking for where to get a short term loan in Singapore, a credible money lender like U Credit might offer you the best solution.