A loan is a form of debt defined as any amount of money borrowed for personal purposes. In Singapore, such loans are usually secured from a bank, a credit union, non-banking financial companies (NBFC) or licensed money lenders in Singapore, the interest rates for which are predefined. Loans are taken by individuals for many different reasons – to consolidate debt, finance home renovation expenses, fund one’s education, purchase a new vehicle or other machinery and so forth. Repaying this type of debt is usually including an exciting value. In other words, personal loans are a modality of instalment debt that allows an individual to access a lump sum of funding for private expenditures.
What is an Urgent Loan?
The process of securing a loan through general channels has many different steps associated with it. First, you must find the right loan for your requirement, then proceed to fill out their application and wait for them to contact you with the next steps. Credit score evaluation, discussions about collateral or mortgage, etc., extend the process even further, leading to a time lag of at least a week between the date of application to the date of approval.
However, sometimes an individual may require money on an urgent basis and may not have the ability to wait for a week for their loan to receive approval. Some remedies are available for such individuals. Some loans can be taken out quickly and efficiently since they are made particularly for urgent cases, and such loans are known as urgent loans.
Apart from banks, certain lending institutions operate with the sole purpose of providing you with cash loans to tide you over in case you find yourself in an emergency with a dire need of financial assistance. Usually, Singapore has highly rigid regulations for credit score evaluation before sanctioning a loan, which is undoubtedly bad news for people with a poor credit score and an emergency on their hands. However, it is understood that difficult circumstances can occur for anybody without any prior notice. Emergencies do not discriminate between who has a strong credit standing and who has a weak one. Hence, some institutions do their kind of due diligence without using their clients’ credit score to help them finance their emergencies effectively. This is a significant advantage that such agencies have over regular lenders.
Urgent loans have a thirty-minute to one-hour approval period. If you have a good credit score, your urgent loan will be sanctioned within minutes. You can then use the cash for any reason – urgent repair, paying off essential bills, etc. Typically, such loans come to maturity anywhere between one to six months, and the interest rates tend to be quite reasonable. This is why it is also called a short-term loan.
Types of Urgent Loan in Singapore
- Personal Loan: This type of loan can be taken out by approaching banks, credit union agencies or private money lenders. It differs from other loans since the exact reason for your financial requirement need not be disclosed. Therefore any loan taken out due to personal reasons is called a personal loan. Usually, no collateral is needed for this type of loan, and the interest rates are pretty reasonable. Since it is an unsecured loan, you may need to meet some additional criteria to be eligible for this loan.
- Payday Loan: As the name suggests, a payday loan is taken out for the time period up to your next payday or the day when your salary gets credited to your account. This kind of loan is usually used in case of emergencies. Unlike personal loans, which tend to be repaid in instalments, payday loans are repaid in full upon the next payday’s arrival. Since the repayment is based on your next salary, your lender may restrict the amount you are allowed to borrow such that the repayment value is less than your salary amount. Such considerations are made after looking at your income, wealth accumulation and credit history.
- Pawnshop Loan: A pawnshop is a shop that allows you to avail of quick cash by pledging a valuable item as collateral. Pawnshops are not financial agencies but quick, easy, and informal to gather some money for emergencies. The borrower leaves a valuable commodity with the pawnshop owner; in case they are unable to repay the money within the stipulated time, the pawnshop owner is at liberty to sell off the collateral item in order to realize the money. While this is not the ideal method, it’s a good option if you do not wish to go through the complex procedures associated with getting a loan approved.
- Credit Card Advance Loan: This type of loan allows you to get quick cash where your credit cards are not accepted. Essentially, you can avail of an urgent loan against the available balance on your credit card. Your bank shall charge you interest and a service charge for such cash advances and the interest rates tend to be higher than those of regular credit cards. These type of loans are a quick and convenient way to avail of cash since you are already connected to the financial agency that you are borrowing from. This cuts down the due diligence required significantly.
Overall, there are many different credit agencies, non-banking financial companies, regular banks, and private money lenders in Singapore for prospective borrowers to choose from. Many individuals find themselves in urgent need of finances at some point or the other, and urgent loans are a blessing for such cases since it is a low cost, low effort and highly convenient way to finance their emergency expenses. The short approval duration and flexibility of terms makes it a beneficial modality in Singapore.
However, like with all loans, each prospective borrower needs to evaluate all their options before making any financial decisions. Armed with the correct knowledge and resources, prospective buyers will be able to choose the right type of loan, duration of repayment and lending agency to assist with their urgent loan applications.