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Cheap short term loans in Singapore: Your definitive guide

Providing short term loans in Singapore
Providing short term loans in Singapore

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Do you need money urgently?

Regardless of whether you might require instant cash for a personal emergency or to ease your cash flow for your business operations, fast short term loans from licensed money lenders might be able to help you solve your financial woes immediately.

What is a short term loan?

A short term loan means a loan that is generally of a lower loan amount (around $500 to $35,000) and it is usually unsecured. This tends to be short term cash loans that are taken with licensed money lenders in Singapore, for which you can get fast approval usually within a day.

What is the usual short term loan period?

Most instant short term loans have a repayment period of around 1-6 months, up to 12 months depending on your agreement with the money lender. Do remember to consider your loan tenure carefully based on your monthly budget, interest rate charged, your existing liabilities and more.

What are the differences between a short term loan and long term loan?

Long term loans Short term loans
Where do you usually take the loan from Banks Licensed money lenders
What is the maximum sum you can borrow? Maximum 10 times your monthly income Maximum 6 times your monthly income
What is the repayment period? (Personal loan) Maximum 5 years Maximum 12 months
How fast is the loan approval? Maximum 2 weeks Same-day approval, usually in 10-20 minutes
How easy will your loan be approved? Tough to get loan approval if you have bad credit history, no stable income or have an income of less than $20,000 a year. Can get loan easily even with bad credit history. As long as you are employed and have not defaulted on existing loans with money lenders, your loan will likely be approved.
What is the interest rate? 3.5-11% a year 1-4% a month (up to 48% a year)

What are the benefits of taking a short term unsecured loan?

1. You can get a short term loan with bad credit

Credit checks are usually more lenient for easy short term loans with licensed money lenders, and even if you have bad credit history, most of the time, you will still be able to get your loan approved as long as you meet the eligibility criteria (unless you have defaulted on multiple loans with other money lenders!).

2. Easy application process

The application process is simple. Most of the time, you just need to fill up a loan application form online on the money lender’s website with your details.

The money lender will just need to submit your details to the Money Lenders Credit Bureau (MLCB) to check your borrowing limit, your existing outstanding loan amount with other money lenders, repayment records, etc.

If your records have no issues, your loan application should be approved within a day.

3. Fast approval

Loan approval usually takes less than a day. The loan officer from the money lender will call you up if your loan can be confirmed, and you just need to go down to the money lender’s office for a face to face verification with your required documents. This is important as it prevents identity fraud. Once this is done, your loan would usually be approved quite quickly.

This would be a good time to negotiate the terms of your short term cash loan, such as the interest rate, repayment terms, etc, before you sign the loan contract. Once that is signed,

the cash will be disbursed to you within minutes.

4. Flexibility of payment

Licensed money lenders will usually allow you flexibility in repayment period. Before you sign the loan contract, you can request for weekly, bi-weekly, monthly or payday repayment frequencies.

What are the disadvantages of short term loans?

1. Short term loans tend to have high interest rates

Due to the short period of repayment, short term loans’ interest rates in Singapore tend to be higher than long term bank loans. Interest rates usually range between 1-4% per month.

However, for personal loans, the interest rates are computed on a reducing rate, based on the principal amount outstanding at the end of a specific period. For instance, if your loan amount is $12,000 and if you have already repaid $2,000 (not including interest), the interest for your next payment will be calculated based on the remaining $10,000.

2. Higher chance of accumulating late repayment fees and late interest easily

As short term loans and advances are usually of a lower loan principal amount as compared to long term loans (eg. taking a $1,000 loan over a short term instead of a $10,000 loan over a longer term), it’s easier to get complacent about the repayment as some borrowers might feel they can be paid off easily.

If borrowers miss the repayment deadline, it’s easy to accumulate late fees (not exceeding $60 for each month of late repayment) and late interest (up to 4% per month for each month the loan is repaid late) from the late repayments.

3. Short term loans tend to have higher repayment amount

Due to the shorter repayment period, short term loans will have a higher repayment amount for every installment. For example, if you are repaying $1,000 over 12 months, you will be paying a higher amount per month as compared to repaying $1,000 over 24 months.

Why do short term loans have higher interest rates?

As short term cash loans can be paid off within a shorter period of time (as compared to longer term loans for which more interest is accumulated and spread out over a longer period), the interest rates tend to be higher per month.

Also, due to the less stringent checks on loan applications and fast approval processes, licensed money lenders are taking on a higher risk of borrowers defaulting on their loans. This risk comes at a cost, and hence they charge a higher interest rate.

What are the types of short term loans in Singapore?

1. Short term payday loans

A common type of instant short term loan is the 1-hour payday loan, which is usually a one-month loan. This usually helps people with cash flow problems – for example, you might need cash urgently for an emergency but unable to receive your salary till the end of the month.

Payday loans then act as a salary advance to help ease your cash flow, and you have to repay the loan once you receive your salary.

2. Fast cash loans

If you require urgent cash instantly, a fast cash loan might be suitable for you – you can get instant approval in less than a day and cash in your hands (or in your bank account) minutes after your loan contract is signed.

3. Debt consolidation loans

Do you have multiple debts from different licensed money lenders? It can be very stressful to manage multiple loans and repayment deadlines – once you miss some, the late repayment charges can add up.

If you are experiencing this, you can consider taking a debt consolidation loan, where you consolidate all your loans with one money lender, so you only need to manage a single loan and a single repayment schedule – much more convenient!

4. Short term loans for startup business and SMEs

For start-up and SME business owners, short term SME loans can help you ease your cash flow if you are short of cash for the month for your business operations. For example, you might need to pay your employees and suppliers for the month but payment from your clients can only come in the next month. This is when some of the best short term business loans can come in handy.

Short term commercial loans can also provide a good and quick temporary relief for businesses that are in need of urgent cash, as they might not be able to qualify for a bank loan nor wait out the longer bank loan approval period.

However, do note that business loans differ from personal loans not just in the purpose of the loan but also in borrower eligibility, loan process and documentations, collateral required, upper and lower loan limits and more.

How to get a short term loan?

1. Make sure you meet the eligibility criteria

Licensed money lenders are regulated by the MInistry of Law, and they have a set of eligibility criteria for not just the lenders but borrowers as well.

For personal short term loans, most employed Singapore residents are eligible, including self-employed such as cab drivers, financial advisors, etc, as well as part-timers and foreigners (as long as you can show proof of residence in Singapore).

2. Understand how much you can borrow

As short term loans tend to be unsecured, there’s a maximum limit on the amount of money you can borrow, depending on your income and citizenship status. Here’s the maximum amount borrowers can borrow from money lenders:

Borrower’s annual income Singapore Citizens and Permanent Residents Foreigners residing in Singapore
Less than $10,000 $3,000 $500
At least $10,000 and less than $20,000 $3,000 $3,000
At least $20,000 6 times monthly income 6 times monthly income

3. Compare short term loans with different money lenders

Before you select a money lender, it’s important to do your short term loan comparisons between different money lenders, so that you can find your ideal low interest short term loan that is most suitable for your needs.

4. Apply for your short term loan online

Once you have done all your comparisons and narrowed down to the money lender providing the best short term cash loan that you are looking for, you can apply for your loan online anytime – the application form is usually on the money lender’s website.

If you would like to apply for a loan with MM Credit, it can be done in a few minutes!

5. Bring down the required documents to money lender’s office

Once your loan application is approved, make sure you bring down the necessary documents to the licensed money lender’s office for verification.

Required Documents for Personal Loans:

For Employed Singaporeans:

  1. IC
  2. CPF contribution statement (can be retrieved with Singpass)
  3. Latest 3 months payslip (if monthly salary more than $6,000)

For Self-Employed Singaporeans:

  1. IC
  2. IRAS Notice of Assessment (NOA) (can be retrieved using Singpass) or
  3. Proof of income (bank statement, commission statement or any official income statement)

For foreigners:

  1. Employment pass
  2. Proof of home address (tenancy agreement, proof of billing address)
  3. Latest payslips for the past 3 months

Required Documents for Business Loans:

  1. Past 6 months’ bank statements
  2. Company Constitution (which defines the rules by which a company should operate)
  3. The company’s major shareholders’ and directors’ ICs
  4. Tenancy agreement
  5. Bizfile
  6. IRAS’ Notice of Assessment (NOA) of company’s major shareholders
  7. Credit report with Credit Bureau Singapore (CBS)

Best places to get short term loans in Singapore

You can get some of the best short term loans from licensed moneylenders all over Singapore, such as from Jurong money lenders, Toa Payoh, Orchard, Tampines, Bedok (that’s where we are located!) and in various other neighborhoods on the island.

MM Credit offers some of the best rates for instant short term cash loans, so if you need one, apply for a loan now with us!

 

Disclaimer

The information contained on this website is not intended as a substitute for advice from a licensed professional. We do not guarantee the accuracy, completeness, suitability, or validity of any information provided on this website. We will not be responsible for any errors or omissions on the site nor will we be liable for any loss or damage caused by reliance on any information obtained through this website.

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