Short Term Loan 101
Even the most organised and responsible individuals can find themselves facing unexpected money problems. In challenging times like these, a solution you can try is a short-term loan. This offer is a reliable solution that will save you when you need it most.
Here at OMY Singapore, you will discover the following:
What Is A Short Term Loan?
A short term loan provides borrowers with relatively small sums of money, ranging from S$500 to S$35,000. These loans typically do not require collateral, which simplifies the application process.
One of the key advantages of short-term loans is their speed of approval. In most cases, borrowers can expect their applications to be reviewed and approved within one day. This quick turnaround time makes them a practical solution for urgent financial needs.
Another unique characteristic of short term loans is their repayment term. This usually spans a year or less.
Advantages Of Taking A Short-Term Loans In Singapore
To help you decide whether a short-term loan is the right solution for you, it’s important to consider the advantages that these loans offer.
It’s easy to apply for a short-term loan in Singapore, as most lenders have online application processes that can be completed in a matter of minutes. This means that you can apply for a loan from the comfort of your own home, without having to visit a physical bank or lender.
Additionally, the quick approval process means that you can receive the funds you need on time. This can be especially helpful if you need money urgently.
High chance of approval
A short term loan Singapore is designed to be accessible to a wide range of borrowers, including those with less-than-perfect credit scores. Even if you have a history of bad credit, you may still be able to qualify for a short term loan in Singapore.
One of the biggest advantages of taking out a short-term loan in Singapore is the flexibility that it offers. Unlike other forms of financing which may come with strict limitations on how the funds can be utilised, short-term loans can be used for a wide range of purposes. Whether you need to cover your vacation budget, make a down payment on a new car, or pay for a home renovation project, a short-term loan can provide you with the funds you need to get the job done.
In Singapore, it’s easy to shop around for the best short term loans since borrowers have a wide range of options to choose from. This can help you find a loan that fits your specific financial needs and preferences, including interest rates, repayment terms, and loan amounts.
May improve credit score
By making timely payments on your loan, you can show loan providers that you are a responsible borrower. This can increase your chances of being approved for future loans and credit cards with better terms and interest rates.
Disadvantages Of Taking A Short-Term Loans In Singapore
It’s not enough to consider only the advantages of taking out a short term loan in Singapore. You should also weigh its potential downsides.
While the application process is typically quick and easy, borrowers may be charged a fee for processing their loan application. This fee can vary depending on the lender and the loan amount so read the fine print and understand all the associated costs before finalising the loan.
Higher interest rates
Compared to long-term loans, short-term loans in Singapore generally come with higher interest rates. This is because short term loan Singapore providers need to make a profit on their loans, and they may view short-term borrowing as riskier than long-term borrowing. Carefully consider the interest rate and how it will impact your ability to repay the loan.
Pressure to repay quickly
Due to its short repayment term of short-term loans, borrowers may feel pressure to repay the loan quickly. This is stressful for those who are already struggling with financial difficulties. The pressure may quickly lead to additional financial strain and can result in the borrower taking out additional loans to cover the repayment of the initial short term loan.
Not great for long-term needs
Since short-term loans are meant to be repaid within a year or less, they are not well-suited for long-term needs. Borrowers who need to finance a big-ticket item, such as a house or a car, may find that a long-term loan with lower interest rates is a better option.
If borrowers are unable to make their payments on time or default on the short term loan in Singapore altogether, they may be subject to additional fees. These penalty fees can quickly add up and make the loan even more difficult to repay.
Various Types Of Short Term Loans In Singapore
Are you considering taking out a short term loan in Singapore? Here are some of the most common types of short term loan options you can apply for.
Lines of credit
A line of credit is a type of short term loan that provides borrowers with a credit limit that they can draw from as needed. Unlike a traditional loan, a line of credit allows borrowers to access funds whenever they need them until the maximum credit limit is used up. This can be useful for managing cash flow, as borrowers can access funds when they need them and only pay interest on the amount they use.
Merchant cash advance
This type of loan is specifically designed for business owners who need quick access to cash. With a merchant cash advance, loan providers give the borrower upfront cash in exchange for a percentage of their future sales.
As its name suggests, a payday loan is a short term loan that is typically repaid on the borrower’s next payday. This short term loan Singapore usually has a small amount since it’s only designed to help borrowers cover unexpected expenses or bills that they may not be able to afford until their next paycheck.
Emergency cash loan
Great for unforeseen emergencies, an emergency cash loan can give borrowers immediate access to funds. This can be especially useful in situations where unexpected bills arise.
Short Term Loan Singapore: Where Can You Apply?
We’ve gathered a list of some of the most popular places to get short-term loans in Singapore.
Banks and financial institutions
These short term loan Singapore providers offer a variety of loan options, including personal instalment loans, lines of credit, and payday loans.
To qualify for a short term loan from a bank or financial institution, borrowers typically need to have a good credit score and a stable source of income. While they offer the lowest interest, prepare to go through a lengthy application process that may include submitting financial documents and undergoing a credit check.
Unlike banks and financial institutions, licensed moneylenders are typically more lenient with credit scores and income requirements. However, borrowers should be aware that they may be charged higher interest rates and fees compared to traditional lenders. That said, licensed moneylenders are regulated by the law and cannot charge more than 4% interest per month for any loan.
It may be surprising to some, but pawnshops are a popular option for short term loans in Singapore. In a pawnshop, borrowers can bring in valuable items such as jewellery or electronics and receive a loan based on the value of the item.
Then, the borrower has a set period, usually a few months, to repay the loan and retrieve the item. If the borrower is unable to repay the loan, the pawnshop may sell the item to recoup their losses. While this option may seem risky, it can be a good choice for those who need quick cash and have valuable items to use as collateral.
A Word From OMY
Short-term loans can be a helpful tool for managing cash flow or covering unexpected expenses, but they do come with their own set of risks and costs. If you do decide to take out a short-term loan, make sure to only borrow what you can realistically afford to repay. This way, you can steer clear of being stuck in a cycle of debt.
With a dizzying number of options available for short term loans in Singapore, you need help to make your search easier and faster.
At OMY, we use our complex algorithm to pair you with the right loan provider based on your specific needs and financial situation. Our platform is designed to simplify the loan process so you can focus on what’s important – getting the funds you need to manage your financial situation.
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