When you’re facing a minor personal or business emergency which threatens to take a chunk out of your savings, a short term loan in Singapore can shoulder the financial burden for you! Having this source of financing from licensed short term money lenders is useful in ensuring your cash flow remains ready to tackle other expenses.
What’s more, short term lending enables you to maintain your financial discipline with its relatively lower loan amounts and shorter tenures as compared to regular loans.
We’ll provide you with greater insights on what short term loans are, how they differ from long term loans, the benefits of obtaining a short term loan in Singapore, and much more. Let’s dive deeper into short term loan lending!
What Is a Short Term Loan in Singapore?
A short term loan in Singapore is a personal or business loan that has a relatively lower loan sum and shorter tenure. Its repayment period is up to 12 months, and its principal amount ranges from S$500 to S$50,000. What’s more, a short term loan is unsecured, so you don’t need to provide any collateral when applying for it from short term loan lenders.
Also, short term lending keeps your finances on track as there are fewer instalments for you to pay off. You have a much lower risk of repaying a short term loan’s instalments late, and racking up interest and late payment charges.
What Are the Differences Between Long and Short Term Loans?
A long term loan refers to an unsecured or secured loan which has a tenure of at least two years. Additionally, the amount you can take up for a long term loan is typically larger than a short term loan’s, capped at six times your monthly income for unsecured loans from legal lenders. Long term loans are usually taken to fund bigger ticket bills or expenses.
Conversely, we’ve defined what a short term loan is above. To recap, a short term loan is an unsecured loan with a tenure of up to 12 months and amounts between S$500 and S$50,000. Borrowers usually opt for short term lending in the event of a minor emergency. They need cash quickly, and are generally not looking at investing a short term loan’s funds for the long run.
5 Benefits of Taking Up a Short Term Loan in Singapore
1. Your Commitment Is Shorter
With tenures of only up to 12 months, short term loans in Singapore can be repaid much more easily than standard personal or business loans that stretch for years. You don’t have to worry about being bogged down by a loan whose tenure appears to have no end. Short term lending also brings with it a lower risk of falling into a debt spiral. This then brings us to our next point.
2. You Accrue Less Interest
Rates aside, when you take up a short term loan in Singapore, the absolute amount you pay in interest is often lower than a loan with a longer tenure. Therefore, your monthly instalments for short term loans are usually higher, but pound for pound, they’re more affordable than standard loans because you pay less interest in total.
3. You Don’t Need to Pledge Collateral
Most short term loans in Singapore are unsecured due to their smaller loan sums. There’s no need to pledge any valuables to secure funding. However, do note the borrowing limits short term loan lenders implement based on the Ministry of Law’s rules. For example, you need to earn at least S$20,000 annually to access a loan limit of up to six times your monthly income.
4. You Stand to Improve Your Credit Profile
Because a short term loan has fewer instalments than a regular one, it’s easier to pay off. When you pay each instalment punctually and close the account with the short term loan lender, it shows you’re a responsible borrower. This then contributes to jazzing up your credit profile within your Loan Information Report, plausibly allowing you to enjoy preferential interest rates and other perks when you take up loans from legal lenders in the future.
5. You Enjoy Full Flexibility
There are no restrictions for what you can use short term loans in Singapore for. Whether it’s to take care of high interest debt from your credit card bills or for an emergency at home, you’re free to use the short term loan’s funds however you like. Short term loan lending is not subject to the same restrictions as a traditional education loan or renovation loan.
The 7 Different Types of Short Term Loans in Singapore
1. Invoice Financing
This short term loan is aimed at businesses, enabling them to obtain financing that’s “backed” by the unpaid invoices from their customers. Private financial institutions offer this type of short term loan, and they’ll essentially front the lump sum of cash for your business to hold the fort while you wait for your clients to settle the outstanding invoices.
2. Payday Loan
As its name alludes to, a payday loan is a short term loan you take up as a way to obtain your salary “early”. The loan’s principal amount is a portion of or up to your monthly salary, and you have to repay it almost as soon as you receive your following month’s pay. This short term loan is useful if your company has been delaying your paycheck for a considerable length of time.
3. Line of Credit
A credit facility available at major banks, a line of credit is a form of short term loan lending where you’re only charged for the exact amount you borrow. Think of it as having an extra bank account you can obtain funding from anytime, although at a cost. However, do note that each short term loan lender has their own fee structure for offering and maintaining a client’s line of credit.
4. Merchant Cash Advance
In return for a portion of proceeds from your company’s future revenue, a merchant cash advance provides you with upfront funding. This short term loan for businesses is commonly called revenue-based financing as well. Short term lenders recommend this to businesses that require working capital, especially if they’re just starting out.
5. Personal Loan
A personal loan works like a short term loan, but applicants can opt for one with a longer term if they need larger principal amounts or smaller monthly instalments. Every short term loan lender offers a private personal loan, and it might just be the most common one people apply for, apart from home and vehicle loans.
6. Emergency Cash Loan
If you need funding almost immediately, this short term loan is what you would apply for. Many short term loan lenders offer a solution which they can approve swiftly, knowing there are situations which require cash extremely urgently. This is an unsecured loan as well, and don’t worry, there are no restrictions for what you can use the emergency funding for.
7. Bridging Loan
For homeowners purchasing a new property, you’d probably be familiar with this short term loan. A bridging loan provides you with funding for your new home while you wait for the proceeds from your previous house’s sale to come in. It ensures that both you and the current owner of your new home aren’t stranded.
How Do I Pick the Best Short Term Loan in Singapore?
Compare, Compare, Compare
There are over 150 licensed lenders in Singapore. Don’t just accept the first offer you receive when you apply for a short term loan. Make it a point to compare between at least 4-6 short term lenders and tally the total cost of each offer. You’d want to keep an eye out for the firm which has the lowest overall repayment amount.
Read the Fine Print
Although short term lenders are strictly regulated by the Ministry of Law, you’d want to scrutinise the loan offers presented to you. Make sure their fee structure for short term loan lending does not flout the Ministry’s rules and regulations. These include the monthly interest rate, processing fee, and late repayment penalties.
Why You Should Select 111 Credit’s Short Term Loan in Singapore
Among all short term lenders in Singapore, 111 Credit should be your go-to loan company. As an authorised money lender since 2009, and we offer not just short term loans, but debt consolidation loans in Singapore, business loans for SMEs, and much more. We’ve served over 3,000 satisfied clients, and process loans in as fast as 25 minutes.
Have the confidence you need to apply for a short term loan with us? Get your application started now! If you still have any queries, or would like to learn more about our loan offerings, simply reach out to us.
