External financing from banks or licensed money lenders is crucial as we progress through life, especially for big ticket purchases or business purposes. However, there’ll be occasions where we require short term loan lending for smaller financial emergencies.
A short term loan in Singapore helps tide you through any minor crisis quickly while waiting for payments (salary, dividends, etc.) to be made to you. With short term lending, you prevent yourself from falling into a debt trap.
Read on to learn what exactly a short term loan is, how to find a short term loan lender, and how many different types of short term loans there are.
What Does “Short Term Loan” Mean?
A short term loan is a personal or business loan with a much shorter tenure than a medium or long term loan. This can range anywhere from one to 12 months. For example, a payday loan’s tenure is around 30 to 31 days. Often, the amount you can borrow via a short term loan is proportionately lower as well. Think a month’s worth of salary or a relatively low five-digit sum.
The purpose of a short term loan differs from a medium or long term loan, too. As mentioned earlier, you’d want short term lending for small and sudden financial issues. On the other hand, individuals and companies take up a longer term loan for large investments and/or major purchases. In general, more consideration is required for a longer term loan compared to short term loans.
5 Benefits of Short Term Loans in Singapore
1. You Pay Less in Interest
While the interest rates for a short term loan are higher compared to a long term loan, due to its shorter loan duration, it’s technically a better deal in the long run as you’re paying less overall.
This is because the original sum and tenure of a short term loan is lower and shorter, which means less accumulated interest as a whole.
2. Your Loan Application’s Approval Is Faster
Remember, short term loans in Singapore generally involve smaller amounts and shorter tenures. Therefore, it’s easier for people and businesses to qualify for short term loans, especially if you’re borrowing less than what your annual income entitles you to. As a result, approval from the short term loan lender also becomes quicker.
3. You Benefit From Greater Flexibility
As short term loans have tenures that are more brief, short term money lenders are usually more than willing to work out a repayment frequency that suits you. For example, weekly or bi-weekly repayments rather than the monthly repayment of longer term loans. This is especially useful for individuals who draw a daily income, such as a restaurateur or stock trader.
4. You Stand to Boost Your Credit Profile
A short term loan in Singapore is much easier to repay than a longer term one. By consistently making your short term loan’s repayments punctually and closing the account, you’re demonstrating that you’re a reliable borrower. You’ll then build up a healthier credit record and potentially enjoy better interest rates —and/or other loan terms— when you take up loans again in the future.
5. No Collateral Is Required
For the most part, a short term loan in Singapore is unsecured because of the lower borrowing amounts involved. This means you don’t need to pledge any collateral when applying for short term loans. However, you do need to put down collateral and turn your short term loan into a secured one if you require an amount that’s beyond your income limit.
Find Out What You Can Use Short Term Lending For
To Settle High Interest Debt
If you haven’t repaid your credit card bills in full for 1-2 months, short term loan lending allows you to finally close your balances and greatly reduce the interest you take on. A credit card’s interest rate on outstanding balances is in the double-digit range, whereas short term loans only charge 1-4% a month in interest.
To Capitalise on an Investment Opportunity
Should you be offered an attractive but time-limited opportunity to invest or grow your business, short term loan lending gets you the funding you need immediately. Therefore, with short term loans, you don’t have to worry about missing out on growing your wealth. What’s more, because you’re only repaying the short term loan across several months, don’t worry about a cash crunch.
To Plug Gaps in Your Income
This is where short term loans like invoice financing and payday loans come in handy. If you’re owed money that hasn’t come in yet but have expenses to settle urgently, short term loan lending covers your back in the meantime. In essence, you’re using short term loans to access the funds you’re owed.
To Immediately Resolve Smaller Personal Emergencies
Short term loan lending is useful when issues suddenly crop up at home. These include needing to replace a pricey home appliance or an essential part of your vehicle. Funds from a short term loan lender enable you to resolve the situation right away instead of fretting over how you can afford the payments.
The Different Kinds of Short Term Loans in Singapore
Generally, there are eight different solutions which a short term loan lender offers. These short term loans are:
- Payday Loan – A short term loan where you borrow an amount equal to a portion of your monthly salary and repay it once you receive your following month’s paycheck.
- Credit Line – A solution from a short term loan lender which functions differently than a “regular” loan. Think of it as an account you can draw funds from anytime and repay – with interest – the exact amount you borrow.
- Invoice Financing – An enterprise-specific short term loan that allows borrowers to receive a cash advance equal to the unpaid invoices from their customers.
- Bridging Loan – A type of short term loan that’s usually for housing in Singapore. It “bridges” the gap while you’re waiting for the funds from selling off your property to purchase a new home.
- Emergency Cash Loan – In essence, a short term loan which you can receive approval for almost instantly. Borrowers would apply for this from short term loan lenders when they need money right away, such as for a major medical emergency.
- Merchant Cash Advance – If you run a business which needs working capital, most short term loan lenders offer this solution to inject some much-need funding into your company.
- Instalment Loan – This flexible solution from short term loan lenders can also be a longer term loan. It involves borrowing an amount of money and repaying it across a fixed number of monthly instalments and interest rates, hence the name.
- Personal Loan – Like an instalment loan, a personal loan can be a short term loan or a longer term solution. All short term loan lenders offer this and it’s the most common product borrowers apply for.
How Can You Get the Best Short Term Loan
Ready to apply for a short term loan? Hold your horses before you contact us! We’ll show you how to get the best deal from short term lenders in Singapore:
- Before applying for solutions from short term lenders, check whether you’re eligible for their short term loans. As a quick guide, you need to be employed in Singapore, legally reside in Singapore, and have a stable income.
- Don’t stop at one. Submit your application to different short term lenders and compare their offers against each other. There’s no need to accept any offer on the spot, and definitely avoid firms that pressure you to do so.
- Do the maths for all the short term lenders you received loan offers from. Calculate the total repayment (incl. all fees and interest) and go for the most affordable one. Ensure you’re comfortable with the repayment period as well.
- Understand the Ministry of Law’s rules and regulations for licensed money lenders in Singapore. These include the maximum interest and fees they can charge for short term loans, along with the borrowing limit for applicants.
Obtain a Fuss-Free Short Term Loan in Singapore With 1-Cash
Among all licensed short term money lenders in Singapore, 1-Cash is your best bet. Every applicant benefits from fast approvals and fund disbursals, personalised short term loan offers, and detailed consultation sessions with our experienced loan consultants. You can even apply online for your short term loan seamlessly using Singpass Myinfo.
Furthermore, we offer a wide range of personal and business loans, not just short term loans. These include debt consolidation loans, renovation loans, and business loans. Not all licensed short term money lenders in Singapore offer such a selection.
Get started on your short term loan application with us now!
