With rising fears of a global recession, more Singaporeans may be feeling uncertain about their finances. While there are many options for borrowers, not all of them may be suitable due to strict eligibility requirements. However, due to their flexible nature, 12-month loans from direct lenders have been rising in demand. Let’s take a closer look at these loans.
Understanding 12-month loans from direct lenders in Singapore
What is a 12-month loan from a direct lender?
Well, there isn’t a fixed definition, but you may think of it as an unsecured loan that has a repayment period of 12 months.
Ok, that doesn’t really tell us much, and many loans can fit into this definition. But know that 12-month loans from direct lenders are meant to fulfil a specific purpose, and may be ideal for certain borrowers.
Direct lender 12-month loans are offered by licensed moneylenders. They have the following four features:
1. Flexible loan amount
These types of loans allow you to borrow up to six times your monthly income, depending on your income level. As such, you may find 12-month loans to be a flexible and convenient financing option.
2. More accessible compared to bank loans
12-month loans from direct lenders may have stricter eligibility requirements compared to other loans with shorter tenure. However, as licensed moneylenders have overall less strict requirements compared to banks, you may find these loans more accessible.
3. Fast approval
12-month loans may be quickly approved and disbursed to you – provided there are no problems with your application. This may be preferred for borrowers who require funds urgently.
4. High interest rate
As such loans are offered only by licensed moneylenders, the interest rates they carry are high. Under the Moneylenders Act Singapore, licensed moneylenders can charge up to 4% per month in interest.
This interest is only applicable on the loan amount still outstanding at the end of the month, so paying off your loan quickly can be advantageous.
READ MORE: A Simple Guide to Moneylenders Act Singapore
Is a 12-month loan from a direct lender right for you?
Now that we have identified the features of a 12-month direct lender loan, we can work out who this type of loan is suited for.
A 12-month loan from a direct lender may be right for you if:
- You are confident of paying off the loan within 12 months, if not earlier
- You are unable to qualify for bank loans
- You do not have access to credit cards or credit lines
- You find the interest rates acceptable
Things to note when applying for a 12-month loan from a direct lender
Borrow only what you need
Due to the interest charges, you should try not to borrow more than you need. A smaller loan will be easier for you to pay back.
Work out a repayment schedule
One advantage of a 12-month loan is that it allows you up to one year to pay your loan back. However, you should still be diligent in your monthly repayments to avoid interest charges and late fees.
Work with your lender to work out a repayment schedule that suits your ability to repay.
Avoid taking multiple loans at once
Be careful not to fall into the trap of borrowing more loans to pay off existing ones. Doing so will create a debt cycle that can be difficult to get out of.
Make it a point to take only one loan at a time, and be sure to pay off any existing loans before applying for new ones.
Borrow only from licensed moneylenders
You may come across 12-month loan offers from unlicensed or unknown parties. However, borrowing from such lenders may expose you to the risk of unreasonable interest rates, harassment, and even violence.
To avoid these unwanted consequences, be sure to borrow only from licensed moneylenders.
Conclusion: Where can you find 12-month loans from direct lenders in Singapore?
You will find that 12-month direct lender loans are exclusively offered by licensed moneylenders, and are readily available all over the island. With the wide selection of choices around, you should be sure to pick one that suits your needs and circumstances.
Elite Investment and Credit is a fully licensed legal moneylender in Singapore, offering 12-month direct lender loans at competitive interest rates. Contact us for a discussion on your financial needs today!