It happens to everyone — life throws unexpected curveballs our way and, sometimes, they come in the way of emergency expenses.
In such situations, a short term loan in Singapore can give you quick access to cash, usually with a short repayment period (also known as a loan tenure).
In this guide, we’ll cover everything you need to know about short term loan lending, including their benefits, types of short term lending and short term loan lenders, and tips for securing the best deals (read: tips from being one of Singapore’s short term lenders).
The basics: What’s the definition of a short term loan?
Short term loan lending essentially involves a short term loan designed to help you cover expenses quickly and with minimal fuss. If you’re finding yourself in a temporary, but sudden cash flow issue, a short term loan might suit you.
In such situations, a short term loan lender can provide the upfront sum of money you need to pay the bills, while giving you some time to repay it via smaller instalments.
Here’s a quick breakdown of what you need to know about short term lending.
- Loan duration or tenure: Typically less than a year, between a few weeks and up to 12 months. Financial services such as 3-month, 6-month, or 12-month loans are examples of short term loans.
- Interest rates: Generally higher than long-term loans, reflecting the convenience of quick approval and shorter repayment periods.
- Suitability: Ideal for individuals or businesses needing fast access to cash, often to cover short-term gaps.
Why might you benefit from a short term loan?
Super-quick approval and application process
Unlike traditional, longer term loans, short term loans are as easy for you to access as possible, and that starts with minimal paperwork so it’s convenient for you to apply with a mere few clicks. What’s even better is that short term loans can often be approved in as little as 24 hours. At Elite Credit, our loan process takes as little as 30 minutes.
No long-term commitments
There’s no doubt that financial commitments can add stress. In this case, a longer loan tenure means a longer duration of stress and commitment. A short term loan is a good way to take it easy and get the loan off your back sooner.
Flexibility in payment terms
Unlike long-term loans, short term loans offer flexible repayment schedules that fit your current cash flow. These terms can be discussed or negotiated with your loan officer, who will work with you to find a solution that works for you.
Use it to beef up your credit profile
With the flexibility of manageable terms, keeping up with your short term loan repayments can allow you to improve your credit profile, which can, for example, increase your chances of getting a larger loan sum in the future.
Different types of short term loans in Singapore
There are many kinds of short term loan products in Singapore, and they go by different names. Essentially, they’re all loans that are meant for immediate needs, with a short repayment period.
Invoice financing
A great option for businesses to manage cash flow issues, invoice financing allows companies to borrow money against unpaid invoices, or money that the business is owed. Businesses can usually borrow up to 80% of their invoice value, using unpaid invoices as collateral to secure low-interest loans.
Payday loans
Ideal for extremely urgent, short term needs, payday loans in Singapore are loans pegged to your payday — and are therefore, typically repaid with your next paycheck. With proper planning, make sure that you don’t find yourself trapped in a payday loan cycle.
Lines of credit
If a credit line is extended to you, it acts as a revolving fund, allowing you to borrow as and when you need the money, up until you hit a specific limit. There is no fixed loan tenure in this case. Banks offer such financial products to their customers but there are fees involved to keep one’s line of credit account open.
Merchant cash advances
Merchant cash advances are used primarily by businesses to address their working capital requirements. In exchange for a lump sum payment to the business, the business offers a fraction of its future sales.
Personal loans
Personal loans are unsecured loans that are versatile and flexible loans; they can be used for any purpose. Their loan tenures vary greatly depending on whom you’re borrowing from. Legal lenders typically offer loan tenures ranging from 3 to 12 months, whereas banks offer loan tenures between 1 and 7 years.
Instalment loans
Instalment loans allow for fixed monthly payments, making them easier to manage. A personal loan is an example of an instalment loan, in case you’re wondering!
Emergency cash loans
They’re used only to cover unexpected emergencies such as urgent medical care, and are repaid quickly.
Bridging Loans
Useful for real estate transactions, bridging loans provide funds so that you can buy a new home while selling your current one. They’re typically six months long, and have a high interest rate. Unlike other short term loans, bridging loans are secured loans backed by the sales proceeds of your current home.
Where to get a short term loan in Singapore
Finding the right short term lender is key to ensuring a smooth borrowing experience for you. Look for legal money lenders, banks, or other financial institutions that align with your needs — but keep in mind that they all come with different considerations.
Licensed money lenders
These are legally regulated lenders who abide by regulations set by Singapore’s Ministry of Law. This means that their interest rates are capped within legal limits.
The Ministry of Law (MinLaw) has strict limits on interest rates and fees for loans in Singapore to protect borrowers:
- Interest rate limit: 4%, calculated based on your outstanding balance.
- Administrative fee limit: 10% of the loan principal, payable upon loan approval.
- Late payment penalty limit: $60, regardless of the missed instalment’s value.
Any lender that exceeds these limits is operating outside of legal requirements, and that’s a massive red flag.
Licensed money lenders can loan you any amount for a secured loan, and customised amounts for unsecured loans, depending on your annual income.
Our verdict: They’re known to have minimal paperwork, streamlined procedures, and less credit discrimination than banks, making them a good option for a variety of needs.
Traditional banks
Banks, too, offer short term loans, but with significantly stricter eligibility requirements.
Your credit score will be assessed thoroughly, and chances of rejection are high if it is poor. Additionally, some banks are particular about income and age requirements. Many in financial need might find these restrictions challenging to work with, and may also resultantly be subjected to longer loan processing times due to the layers of criteria.
Our verdict: They’re best for low interest rate deals if you have a good credit history and can deal with a slightly longer processing time.
Pawn shops
Pawn shops give you a faster way to borrow money — you can walk up to the shop with one of your valuables, such as jewellery, to be used as collateral.
If you can pay back the loan within six months, the interest rates can be lower than those you’ll find from other sources. But keep in mind, the longer you take to repay, the more interest you’ll rack up. And if you can’t pay it back, you risk losing your treasured items.
Our verdict: They’re most helpful to people who need quick cash, with no credit or income checks.
Private funders
Found on the Ministry of Law’s “exempted” list, private funders are only allowed to work with corporations or accredited investors. While they aren’t found within the Ministry of Law’s list of licensed money lenders, it’s important to know that they cater to very specific situations.
What individual investors need:
- At least $2 million in personal assets and net financial assets over $1 million.
- Primary residence value has to be less than $1 million
- Preceding 1 year’s earnings has to be less than $300,000
What corporations need:
- Net assets of over $10 million
Our verdict: They’re best suited for people who want to borrow large amounts of money.
Is there a trick to finding the best short term loan in Singapore?
When it comes to loans, there is no trick or secret as good as careful research and planning! Here are five important things to help you to pick the best short term loan lender for you.
- Compare, compare, compare: Keep your eyes peeled for interest rates, fees, loan terms, and repayment flexibility. Check for licensed money lenders listed under the Ministry of Law (MinLaw) to ensure credibility. Double and triple check by ensuring the lender’s landline, office address and licence number tally with the information provided in MinLaw’s list!
- Evaluate terms and fees, for your specific needs: Pay attention to the repayment period, interest rates, administrative fees, and any late payment charges and discuss how they affect you with your short term loan lender. Understanding the full cost of the loan will prevent surprises later.
- Read customer reviews: It’s always good to learn from the experiences of other borrowers. Check online reviews to see if the short term loan lender is reliable, transparent, and provides good customer service.
- Know the eligibility requirements: Each short term money lender may have specific conditions, such as minimum income, age, or nationality requirements for short term loans. Knowing these upfront will save you some time.
- Understand your rights, and then protect them: Familiarise yourself with short term loan lending and the Moneylenders Act to ensure you know your rights and the regulations that govern licensed lenders in Singapore. And remember, never be afraid to take action if something feels wrong.
Get the funds you need — a short term loan with Elite Credit
When life throws unforeseen challenges your way, having a dependable lending partner makes all the difference.
We pride ourselves on fast approvals, empathy, and the patience to discuss flexible loan options with you. Whether it’s a payday loan, a poor credit loan or a monthly loan, Elite Credit is a judgement-free zone where you can find a solution that suits you.
We’re here to help you feel confident as you take control of your finances. Explore your options, apply today, or get in touch with our team for expert guidance.
