There are times when you find yourself cash-strapped in the middle of the month. Whatever cash you are left with is not enough to cover your fixed monthly expenses, and, on top of that, an unexpected financial emergency comes up. There could be many reasons why you might need urgent cash to help you until you get your next salary. For such times, a short-term loan could be perfect for you. These loans are meant to help you with your short-term cash requirements. Many personal loans available in Singapore fall under the short-term loans category.
Where to get a short-term loan in Singapore?
There are many licensed moneylenders in Singapore you can approach for your short-term loan needs. These moneylenders can provide you with instant cash through a quick, simple process. Take a look at some of the benefits of getting a short-term loan from a licensed moneylender in Singapore.
Quick loan processing: The time taken by moneylenders to process a short-term loan can be as quick as one hour.
Minimum documentation: Documentation for a loan can be very time consuming. However, in case of moneylenders, you can breathe easy knowing that they require minimum, basic documents to process your loan application.
Interest rate cap: Effective 1 October 2015, licensed moneylenders in Singapore can charge a maximum interest of 4% per month, regardless of your income and the type of loan (secured or unsecured).
Flexibility in repayment: When it comes to repaying the loan, these licensed moneylenders can provide you with a flexible plan that suits your requirements.
How much money can you borrow from a licensed moneylender in Singapore?
- If it’s a secured loan, you can borrow any amount.
- If it’s an unsecured loan, the amount you can borrow depends on your income. If you earn up to S$20,000 annually, you can’t borrow more than S$3,000. In case your annual income is in the range of S$20,000-S$30,000, you can borrow an amount of up to your two months’ income. If you earn more than S$30,000 but less than S$120,000, your loan amount can’t be more than your four months’ income. If your yearly income is S$120,000 or above, you can borrow any amount.
Interest rates charged by moneylenders in Singapore
If your loan contract was signed between 1 June 2012 and 30 September 2015, your moneylender is required to disclose the effective interest rate that will be charged to you. If your annual income is below S$30,000, the interest rate charged to you will be up to 13% p.a. (secured loans) or 20% p.a. (unsecured loans). If your annual income is S$30,000 or more, the interest rate will be mutually fixed by you and the moneylender.
However, effective 1 October 2015, any licensed moneylender in Singapore can’t charge more than 4% interest per month, no matter what your income is or whether the loan is secured or unsecured.
Things to keep in mind:
- Make sure your moneylender has a license to operate in Singapore. You can verify that by looking at the list of licensed moneylenders in Singapore, available on the Ministry of Law website.
- Make sure you understand all the terms of the contract.
- Consider your income and other financial obligations before taking a short-term loan. If you are not able to repay the amount in time, there will be late payment fees and interest charges that could further hurt your finances.
- Borrow only as much as you need. Avoid the temptation of borrowing more than what’s enough to meet your short-term cash requirements.
- Ask for a copy of contract from the moneylender. Your moneylender is legally bound to explain the terms of the contract in a language that you understand.
- Look for any terms in the contract that allow your moneylender to lodge a caveat on the sale proceeds of your property in the event of default. If the moneylender lodges a caveat, you will be legally bound to first repay the loan amount to the moneylender before you sell the property.
- Contact multiple moneylenders for the best possible contract terms. Don’t sign a contract until you are satisfied with the terms and conditions.
- You should be at least 21 years old
- You must have an identity proof
- Your annual income should be at least S$20,000
- You should be a Singaporean citizen or a Permanent Resident
Things to keep in mind after you take a short-term loan from a moneylender
- Make sure you get the correct principal amount of the loan. A licensed moneylender can’t charge more than 10% of the principal loan amount as loan approval fee.
- Pay your loan instalments on time to avoid late payment charges.
- Take a receipt of any payment you make to your moneylender. Always check the receipt for correctness in details like name, date, amount, signatures, etc.
- Get a statement of your loan account at least once in six months and check for its correctness.
- Keep all the receipts and statements as evidence of your payments.