A quick short term loan is a loan that is provided by moneylenders both licensed and unlicensed. Short term loans are catered for people who require additional cash flow to resolve an immediate cash related issue. These issues of borrowers are usually debts or bills that need to be paid before their salary is credited to them. Many benefits come along with taking a short term loan and if it is repaid on time, it could even increase a bad credit rating. The reason why people prefer taking a short term loan is because of the following three reasons.
- The terms and conditions of short term loans are simple for people to comprehend
- Short term repayment prevents the borrower from any long term repaying commitment. Hence, repaying a short term loan is much easier as compared to a bank loan.
- The main selling point of short term loans is the quick process and helping people receive cash as soon as possible
The next step of taking a short term loan is to look for a moneylender to loan you the money. However, it is important to note that there are two types of moneylenders.
2 Types of Moneylenders
Licensed and unlicensed are the two types of moneylenders that operate within and outside of Singapore. Although licensed moneylenders seem like the obvious choice to borrow from, there are situations where people intentionally or unintentionally still borrow from unlicensed moneylenders. So what are the differences between these two?
Licensed moneylenders are legalised and permitted by the related authorities to loan and collect money in Singapore. They need to follow the rules and regulations set by the authorities to operate. When taking a loan or financial advice, these establishments should be your preferred choice due to professionalism, safety, and consistency. Although interest rates are high but they are regulated and in compliance with the law.
Unlicensed moneylenders are illegal operations that bypass the authorities and laws. It is an arrestable offense to operate as an illegal moneylender in Singapore. Illegal moneylenders create their own rules and set interest rates according to their own criteria. Their interest rates are unregulated and can snowball your loan into a new debt. Unlicensed moneylenders tend to use messaging platforms like WhatsApp to solicit. This act is illegal and if a moneylender is credible then they will not engage in such acts. After securing the loan, their debt collection method can be dangerous if you are unable to repay the debt in time or without the addition of interest.
Before taking a loan from moneylenders, it is important to take note of a few things that could save you from a lot of trouble.
Here is a simple guide to follow:
- Moneylenders should provide you with the best repayment scheme to minimise your debt. Usually in monthly repayment plans.
- In compliance with the law. The interest rate can start from 1% per month and the maximum amount must be capped at 4% per month.
- The process is quick, hence, you should receive the cash immediately after the loan agreement and signing of paper is done.