Most of us are familiar with the concept of an instant cash loan in Singapore and it is not uncommon to hear some who speak about it indifferently. Although the functionality of most loans adheres to a very similar underlying principle, it is crucial to distinguish between the options as it would be unfavourable to be caught up in a bad situation of being unable to pay. In this article, we shall discuss the most common types of instant cash loans in Singapore and the range of options available to ease off our monthly financial strain, and also put into perspective how they may be a solution to common financial predicaments.
Instant cash loans in Singapore and how to ensure eligibility through a healthy CBS and BTI report.
An instant cash loan is a loan acquired almost immediately from a financial institution and usually so, without the need to pledge any collateral. Thus the only metric left for institutions to measure their default risks for these quick loans would be the borrower’s creditworthiness itself. This is determined by evaluating firstly the credit bureau score (CBS) report and secondly, by ensuring that the borrower’s balance to income (BTI) is within acceptable levels. The most common types of instant cash loans in Singapore include personal loans, payday loans, and microloans.
Instant cash loans in Singapore have grown recently to be an integral part of the society we live in, mainly due to increased consumerism, attributed to e-commerce and the ‘buy now pay later’ campaigns that encourage excessive personal spendings. However, it is important that we understand the institutions offering them, the key differences between the loans and also, how we can use them to better manage our finances.
Institutions offering instant loans and how they can be used to aid out financial obligations.
The most prevalent type of instant cash loan in Singapore is known as a personal loan, and it can be applied from a bank (through a credit card or line of credit) or from other financial institutions such as licensed money lenders. It’s no doubt that we live in a society that inherently discourages the debt culture, yet, it is critical to understand that a personal loan may be the solution to the problem of a large credit card bill or purchase, and it can also cushion our monthly loan obligations. Instead of spending a large portion of our income on an impending huge ticket item purchase, an instant loan may be a better solution to segregate the large payment into smaller monthly payments. Also, if we are unable to pay our credit card bills promptly, due to a financial strain, an instant loan may come in handy to meet the payment schedules and to avoid the exorbitant default fees and interest rates which revolve between 25% to 29% per annum. An instant loan would enable us to save on such high-interest payments since they typically charge somewhere around 7%-9%. This would enable us to lower the total interest payable on borrowed funds (eg credit cards?). Furthermore, a key consideration for creditworthiness is timely and complete payments. Hence, the use of an instant loan may enable us to properly plan and scatter our monthly payments in order to keep to our payment due dates.
Payday loans (another type of instant loan) and why they are not always necessarily bad due to their relatively higher interest rates.
With the rise in the cost of living, especially in Singapore, it is becoming more common to see individuals (especially young adults) requiring financial assistance till their next paycheck. Payday loans are mostly suggested to these individuals who may require a bit more money to ride through an unplanned and tough period or for those who may need a little extra assistance just to tide through till they receive their salary. These loans are often short in terms of tenure (1-3months). Also, the interest rate charged would usually be in the double digits suggesting that this type of loan tends to be very expensive. It is always recommended that we lower our debt obligation and always secure a lower interest rate. However, we cannot completely negate that some loans are structured as such and even with a higher interest rate, it may still be the better alternative due to its lower tenure period. 1-3 months of 10% interest would be more desirable than a 2% interest being charged over 2-3 years. For this, always calculate the total interest payable to make a better decision on the type of loan that fits your personal requirements in order to achieve the best financial outcome for yourself.
Instant loan for entrepreneurs; microloans and ensuring a business loan is kept separate from our personal finances.
Widespread information and globalisation have inevitably given birth to entrepreneurship now, more than ever. Starting up a business comes with infinite hurdles, the most common of all being, funding. Microloans are instant, short-term loans that may assist individuals or businesses to ensure smooth monetary transactions and a financial buffer in the event of any corporational delays in terms of sending and receiving money. These loans usually provide a much longer tenure to ensure that the business is fully settled before it has to succumb to huge capital outlays and also provide flexible terms to suit the nature of the business structure. It’s good news for all entrepreneurs to know that funding and financing have become an integral part of the society we live in and they can fully focus their efforts towards ensuring the success of their business model without the worry of acquiring investors, etc. This loan can be your immediate quick fix to your cash flow delays.
It’s critical to fully understand the types of instant cash loans in Singapore before we apply for them. It’s never too late to seek financial advice by reaching out to banks or licensed money lenders to fully understand the depth of taking up a loan. Also practicing good payment habits like paying in full and on time will increase their future chances of applying for another loan, if necessary.