Where To Get A Short Term Loan In Singapore

Written by Shannon Wong on February 23, 2023

Have you or your business ever been in urgent need of financial assistance? You may find yourself in an emergency where you require immediate access to cash.

A short-term personal loan can help you with immediate access to a reasonable amount of money that you are able to repay in a short length of time.

The advantage of short-term loans over medium- and long-term loans is that they provide you comfort in knowing that your loan tenure is brief.

However, it is important to be aware of all possible costs since such a short loan has greater fees and penalties than typical loans.

This post explains what a short term loan is, the types of short term loan in Singapore, and where to get a short term loan.

Finally, we will explain how to apply for a small loan in the quickest possible manner.

What Is A Short Term Loan?

A short term loan is a type of loan that is typically paid back within a year or less. These loans are often used for emergency expenses or to bridge a financial gap until the borrower can secure a more long term solution.

A short-term loan in Singapore is a line of credit that is frequently taken out to support a new company endeavour or a personal financial need.

In this, a capital sum is borrowed with the expectation that it would be repaid along with any accumulated interest rates.

It also assists those who want to launch a successful small business endeavour but lack the necessary funds or meet the criteria set forth by banks to qualify for a credit line.

Because the borrowed amount can range from $100 to $100,000, short-term loans are perfect for financing both tiny start-ups and addressing personal financial requirements.

The agreement between the borrower and the lending institution, such as a bank, or the lending individual, such as a licensed money lender, determines the terms and conditions of the loan.

These include the repayment schedule, loan amounts, interest rate, and repayment time. In Singapore, a short-term loan typically has a 12 month repayment duration following loan approval.

Pros And Cons Of A Short Term Loan

Before you learn where to get a short term loan in Singapore, it is necessary to weigh and understand the pros and cons before you finalise your decision. Let’s get into it.

Pros

      1. Accessibility

You can apply for a pay day loan in Singapore with ease because it is simple to find both banks and authorised money lenders.

Online term loan applications are becoming more common among regulated moneylenders and financial institutions, giving you the flexibility to submit your request whenever you need to.

After your loan is approved, you must go to the licensed money lender’s location for an in-person verification before the loan is disbursed.

This procedure helps protect against identity theft and allows the lender to explain the loan terms to the borrower in person.

      2. Quick And Efficient

Business owners can quickly and easily apply for a loan online with many short-term loan providers thanks to their quick and simple application processes. Therefore, reduced paperwork and inconveniences translate into quick turnaround.

It is convenient to apply for a loan at any moment of the day because many companies and private funders that offer short-term loans have websites and mobile phone applications.

      3. Improved Credit Rating Or Score

Another huge advantage of short-term loans is that they can be used to improve your credit rating or score, making you eligible for a larger loan from a traditional lender for a longer term. Your credit rating will rise as long as you make timely repayments of the short-term loan.

Cons

      1. High Interest Rate

Although they are handy and convenient, short-term loans often have higher interest rates than long-term loans because of their shorter tenure.

Compared to a traditional long term loans, the short loan period may need you to pay a higher monthly interest rate. However, you will be able to repay your loan much more quickly.

      2. Greater Probability Of Payment Complacency

Due to the small loan amount and shorter repayment period, some borrowers may end up complacently believing that the loan can be easily repaid.

Due to their inability to remember to make payments, they may end up accruing additional interest and late fees. They can even feel overburdened by the entire amount owed when the loan’s term is up because of this.

In rare circumstances, borrowers can even end up taking out a second loan to repay the first one. A debt spiral might occur if loan repayments are not properly managed.

      3. Beware Of Loan Sharks

In today’s time, it is more difficult to distinguish between a legal money lender and a loan shark. Taking out a loan from a loan shark can also be troublesome because their rates are quite high and there are additional costs that are not disclosed.

Therefore, before you apply for and sign for a short-term loan, you must check and make sure that you are borrowing from a licenced moneylender.

Types Of Short Term Loans In Singapore

In Singapore, there are several options for obtaining a short term loan. These include:

Invoice Financing

This kind of loan is a kind of short-term borrowing that a lender offers to its commercial clients in exchange for unpaid invoices.

Based on the number of weeks that invoices are past due, the lender lends the money and assesses interest. When an invoice is paid, the lender deducts the interest that has been charged on the loan before giving the borrower the money that is owed to the company.

Payday Loans

Payday loans are short-term, emergency loans that must be repaid in full, with interest, on the borrower’s next payday. Repayments are normally made by the lender using the continuous payment authority to withdraw the appropriate amount from the borrower’s bank account.

Line Of Credit

Similar to using a company credit card, using a line of credit has substantially lower annual percentage rates.

The line of credit has a predetermined credit limit and can be drawn upon by the company as necessary. In relation to the amount borrowed, it makes monthly installment payments.

Merchant Cash Advance

Despite being a cash advance, this is still seen as a loan. Here’s how it works – the lender lends the borrower the money they require, and the borrower repays the loan by giving the lender access to their credit line.

Every time one of the borrower’s customers makes a purchase, the lender keeps a specific portion of the proceeds.

Where To Apply For Short Term Loans In Singapore

Now that you are aware of the many kinds of short-term loans available in Singapore, you might be wondering who the major lenders are and where to get a short term loan.

The principal financial institutions listed below are where you can go for a quick loan:

  • Banks: Many traditional banks in Singapore offer short term loans, often called “personal loans.” These loans can have a repayment period of up to three years and may require a credit check.
  • Licensed money lenders: Money lenders are regulated by the Ministry of Law and can provide short term loans with a repayment period of up to 12 months. These loans may have higher interest rates than those offered by banks, but they may be easier to qualify for, and the application process is usually faster.
  • Online lenders: There are also a growing number of online lenders that offer short term loans to Singapore residents. These loans can be quick and convenient, but be sure to research the lender thoroughly and understand the terms and conditions before applying.

Secure Your Future Financially Today

It is important to note that while a short term loan can provide a quick solution to a financial problem, it should be used with caution.

Borrowers should always be sure they can afford the loan and its repayment schedule. Furthermore, always compare the interest rates and fees offered by different lenders to ensure you are getting the best deal.

If you are considering a short term loan, get in touch with 1AP Capital and consult with one of its financial advisors to help you weigh the pros and cons and find the best option for your individual situation.

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