The exponential growth in Singapore’s economy since independence has not only made it a place of interest for established businesses, it has also garnered the attention of many new startups. With a huge influx of foreigners and the limited land space, Singapore has expectedly, grown to be one of Asia’s most expensive countries to live in. As such, it is often that we may see the ones around us or even ourselves, cash-strapped until the next paycheck or, stressing over an unexpectedly large bill/purchase. Here, we shall take a look at the most common types of loans in Singapore so that we will be able to ease off the financial strain caused by large bills or unexpected payments.
Fast cash loan
Living in arguably one of the most expensive cities, it is a common occurrence to exceed our monthly spending budget, having to deal with some unexpected or overlooked payments. This may be a result of unexpected property damage or a vehicle breakdown. Such complications require urgent and almost immediate attention, which may undoubtedly cause a strain on our finances. Unfamiliar to most of us, the solution to our financial conundrum lies in a simple and direct fast cash loan, often available from licensed money lenders. This type of loan in Singapore can be obtained almost immediately (same-day approval) and they are usually customised with a lower tenure period.
Personal loan
A personal loan is possibly the most common type of loan in Singapore. This is because it is available at most financial institutions, including banks and licensed money lenders. Personal loans usually have a tenure period of up to 5 years, making them the most commonly sought-after solution to short-term money shortages. It can also be used to split our large purchases/ huge bill payments into smaller/more affordable monthly installments. As such, it is advisable to seek this route of payment, especially for those who are facing a large credit card bill payment.
Payday loan
Payday loans, also commonly known as short-term unsecured loans, have gained popularity especially amongst the young working class in Singapore. It is characterised by its high-interest rates and short tenure periods. This is largely due to its vast availability and ease of application. However, such loans should be avoided to avoid incurring high-interest rates.
Medical loan
Unlike most developed European nations, Singapore is not a welfare state. As a result, medical bills are scarcely subsidised and the cost of living with an illness can be alarming, assuming we do not have adequate insurance coverage. As such, it is not uncommon to see many individuals facing financial difficulties when it comes to paying their medical bills. A good option would be to consider a medical loan, which in its nature can be similar to a personal loan in terms of the tenure periods. As such, instead of incurring a large payment at once, we can split it into more affordable monthly payments. This is one of the more unfamiliar types of loans in Singapore that needs greater attention.
Wedding loan
Most working adults spend about a year’s worth of their income when it comes down to planning for their big day. Hence, it can harm an individual’s savings for a house or renovation. A good alternative to paying such a huge sum upfront would be to consider a wedding loan. That way, young adults can better plan their finances for their new homes or renovation payments. Wedding loans usually have a lower interest rate as compared to the other options in this list, thus, making it one of the more desirable types of loan in Singapore.
Micro loan
The triumph of digitalisation and the rise of e-commerce have inevitably made entrepreneurship the most upcoming career option for most young adults and even existing business models. To sustain any new business, having sufficient capital flow is imperative. Also, with a limited source of funding, entrepreneurs usually see themselves facing a blank wall when it comes to financing. The good news is that now they can simply resolve the problem by obtaining a micro loan from a licensed money lender, which may provide their business model with tailwinds, hence ensuring their entrepreneurial success.
Debt consolidation
Living in a society with abundant loan options, it is a common occurrence to overspend or over-borrow, often leading to high amounts of debts and payment defaults. However, there is a solution for that too. A debt consolidation plan adds up all your existing debt obligations to then pay it all off and consolidate all the payments into just one loan for a specific number of years, usually up to 7 years. This is done to avoid individuals from filing for bankruptcy and gives them an additional chance at building their credit report once again. The interest rates offered for a debt consolidation plan are usually significantly lower than most other loan options.
Lastly, with all these varied types of loans in Singapore, proper financial knowledge and planning can greatly ease the financial burdens of most individuals. However, it is always necessary to evaluate our ability to service the loan we took and the best outcome will be to pay off all our existing loans and to become debt-free.
