There are times in life when you become a victim of a financial crisis. In these hard times, you need money urgently. For this need, you consult a bank or financial institution which can provide you urgent loans for personal use. A short-term loan is used for this purpose.
Even though it is placed in high-cost loans but people still prefer this loan whenever they are in a financial crisis. In this article, we will discuss short-term loans. We will discuss its definition, type of loans, how to get it, etc.
What is a Short-term Loan?
A short-term loan is a loan given in the form of credit. It is usually given to a person when he needs money for business adventures or his/her financial issues.
This loan includes borrowing money and returning the borrowed money along with the interest on that money. The time span of returning the money in Singapore is 1 year from loan approval. The amount can lie in between $10 to $10000 maximum.
This type of loan is perfect for personal financial needs and for starting your own small business.
The Benefits of Short-term Loan
The benefits that you can get by the short-term loan are as follows:
- It does not include much interest proportional rate. It will not be false if we say that it has zero interest rate as compared to the interest you pay for the long-term loan. So it has almost no interest to be paid.
- You can get it very easily and it can easily be approved as compared to the long-term loan.
- It permits some flexibility in your resources.
Drawbacks of Short-term Loan
As we know that things that benefit you have some drawbacks as well. So here we will discuss some drawbacks of this loan:
- You can only get a small sum of cash as the loan is only for a short time period and is required to pay it back at this time.
- You have to pay a little amount of money before loan approval.
- The low-interest rate is only applicable within the date assigned for repaying the loan. After the date, the interest rate will rise and will be a huge burden on the borrower.
The Types of Short-term Loans
Some main types of the short-term loan are given below:
Merchant Cash Advance
As the name says, it is cash given in advance in the form of credit. So the agent giving this money has direct access to the borrower’s credit facility and can get the cashback.
Line of Credit
It has some features as the credit card has. There is a limit set for the credit. You can get it whenever you are in need. This is a more flexible type of loan and has a very appropriate payment period.
It is usually very easy to get it but has high-interest rates. If you are in dire need of money urgently you can go for this type of loan. The agents can get their money back on the day when you get your pay in your bank account. This loan is needed to be paid in one go along with the applied interest.
This type of loan is for business purposes and a person can get this loan by utilising the invoices that a customer owed them to get the financial institution.
This type of loan is proclaimed by the people who know that they can pay the cashback immediately. This loan is given to the person for business or financial needs in the form of a fund and is paid back by the next income.
This type of loan is given to the person when they require paying their expenditures like medical bills, utility bills, educational expenses, etc.
As the name indicates this loan is offered to foreigners for their educational, working, or residential purposes. The difference between the loan given to the citizens and foreigners is the income requirement.
This type of loan is for entrepreneurs who are trying to start their business and in need of some money to purchase equipment or space for the business.
Where to get the Short-term Loan in Singapore?
Banks can give you many types of loans like personal, business, etc., with short interest rates. As we know that there is a high-interest rate on short-term loans after some time, so taking that loan from the bank will be preferred.
However, there are still some reasons not to prefer this source of loan. First, you have to give the verification of your bank details. You need to prove that you are financially stable enough to repay the loan.
After banks, the most trustworthy option to get these loans is the money lenders. It is easier because you do not have to verify your bank details. Their interest rates are high but not much. They follow the set of rules set by the Ministry of Law. Legal and reliable money lenders can also give you some advice about good short-term loans.
You may also check the list of reliable licensed moneylenders.
This is another source from where you can get these loans. You need to fulfill the terms and conditions that are mentioned by some of the private funders. It can be considered as a good option as well.
How to Choose the Best Short-term Loans?
You can get these loans from the best lenders. All you need to do is to research before applying for the loan. Check whether the lender in which you are applying for the loan is trustworthy or not. After your satisfaction, compare all the loans and offers of all the shortlisted investors. Compare and then choose the one with the best terms and conditions as well as the interest rate.
So short-term loans can be obtained easily and can be a sigh of relief for you when you are in an extreme financial crisis. Its flexibility is the reason for its popularity.
Whenever you need money, try to find some good lender or company that can give you these loans at a low-interest rate and try to pay them as soon as possible.
We hope that this article clears your confusion about the short-term loans and you will be able to get them according to your needs.