02 Feb What Are The Different Types of Loans Available in Singapore
Financial difficulty can hit anyone and at any time. There is no shame in falling into financial difficulty due to external forces or unforeseen circumstances. Alternatively, there are times where big opportunities come knocking yet you do not have the financial capital to capitalise on them. What then can you do to resolve the situation in the quickest way possible?
Getting an Affordable Loan
One possible avenue would be to take a loan from an authorised moneylender in Singapore. A loan would provide you an instant injection of cash but with the obligation to make regular repayments. As time goes by, interest is applied to the loan, meaning you will be paying more than you borrowed. This interest represents the time value of money and opportunity cost incurred by the lender.
Yet, if you were to start researching on loans, you will find that there are many different types. Each type of loan is applicable for a different situation or purpose. In this article, we will be exploring the different types of loans available, including:
- Housing Loan
- Cash Advance Loan & Payday Loan
- Instant Cash Loan & Medical Loan
- Foreigner Loan
- Business Loan
- Education Loan
- Personal Loan
A housing loan in layman terms is a sum of money borrowed to purchase a house. While there is a set objective for the loan, there are no restrictions on the mechanisms. For example, a financial institution might extend you a housing loan with either fixed or variable interest rates.
One factor that distinguishes a housing loan apart from its purpose, is its collateral. Typically, taking a housing loan would entail mortgaging your house to the lender as a security. This means that till the entire loan is paid back, the lender would hold the title or deed to the property. Should you fail to pay back the loan, the financial institution would still own your house.
Cash Advance Loan & Payday Loan
A cash advance loan is designed to meet your short-term financial needs. This loan arrangement is made with the understanding that you have incoming revenue at a later period. As such, the cash required for this period is advanced to you and would tide you over till the next revenue stream.
One common form of a cash advance loan is a payday loan in Singapore. As the name suggests, a payday loan gives you the needed money till your next pay cheque gets cashed in. Upon which time, with the coming of your payday, you would have the funds necessary to repay the loan.
As alluded to above, a cash advance or payday loan is unique in that it is done on a very short-term basis. The amount loaned to you is typically your salary or next income stream.
Lenders will take into account the size of your incoming revenue stream and existing debt in order to determine if you will be able to repay the loan. Provided that you pass these criteria, you should be able to easily obtain the cash advance or payday loan.
In addition, it is worth noting that no collateral is required for cash advance loans. This is important for the nature of the loan as you won’t need to have a sizable asset on hand to promise over to the lender. However, to compensate for the increased risk on the part of the lender, the interest rates on such unsecured loans are higher.
Instant Cash Loan & Medical Loan
An instant cash loan is offered when you require financial help for a particular event which cannot be delayed. The central idea behind it is that the financial institution will provide an instant injection of cash. In turn, you will be able to afford the event immediately.
The medical loan is a prominent example of an instant cash loan. Under this context, you or your family may be in need of a medical treatment that can’t be delayed. As such, you would need to be able to afford the treatment. This is where the medical loan comes in, providing you the sum needed to pay for the treatment.
What differentiates an instant cash loan from a cash advance loan is that its principal sum is not based on revenue but rather what is needed for your event. While the lender may be understanding of your situation, they ultimately will decide whether to extend you the loan based on your ability to repay it.
In the past, as a foreigner, you would have experienced considerable difficulty in securing a loan from an authorised moneylender. This was due to the natural risks that the financial institution had to bear.
For example, there was a history among foreigners who never paid back their loan and chose instead to flee the country. Furthermore, without any existing family ties in the country or major assets, the moneylender would not have been able to recoup much of the losses.
It is also worth mentioning that foreigners often turn to moneylenders as they do not have relatives to borrow money from. Alternatively, banks may not be willing to extend them a loan without substantial proof of their ability to repay the loan. Consequently, many foreigners used to turn to unauthorised moneylenders who charged outrageous interest in order to cover their risk.
A foreigner loan in Singapore caters to foreigners and thus gives you a better chance of having your loan application accepted.
Business loans can be used in a variety of situations to help give your business an injection of capital. This may be used to clear and consolidate debt incurred by your business. Equally common are business loans that are taken to capitalise on a relatively capital-intensive opportunity.
Oftentimes, especially for growing businesses, a big opportunity turns up at your doorstep. However, it would require an investment on your part. This would include capital to recruit more manpower, purchase raw materials, install new technologies, improve your supply chain and more. The primary idea here is that the returns from the opportunity should outweigh the cost of the loan.
In business terms, this technique is referred to as leveraging. In which, the loaned sum is used as a multiplier to get a sizable future revenue sum that more than pays off the loan’s principal and interest.
An education loan, as the name implies, is intended to fund your school’s tuition fees. Given the importance of education and the higher fees charged by premium institutions, oftentimes students take out education loans.
A unique feature of an education loan is either little to no interest being charged to the student during the course of studies. Instead, the real interest only starts to roll once you have graduated and started work. This makes the loan affordable for students who have no regular income during the first few years.
Do you require a loan but do not have a circumstance that fits any of the loans listed thus far? In that case, a personal loan in Singapore would suit your situation best. A personal loan does not work all that differently from the other types of loans, but it can be used for any purpose. This makes it a catch all and highly popular loan product amongst borrowers.
You should note that a personal loan is typically unsecured. As such, it can be processed quickly, typically during the course of a day. However, in return, relatively high interest rates will apply.
Enquire for a Loan from JD Credit
Here at JD Credit Pte Ltd, we strive to achieve each and every one of our customers’ needs and wants. We are a moneylender Singapore organisation that provides loans with the best rates to any individual that is approved by the IPTO (Registry of Moneylenders). Our team of well trained and experienced staffs are obliged and dedicated to help our customers with their financial matters.
Our vision is to achieve excellence when serving customers provide the best information and finest service for our customers and lead in the money lending industry.