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Cash loans

Find out about the fees and charges of short-term cash loans, how to apply for them, and more.

If you are considering a payday loan from a moneylender you should read the “Notes for Borrowers” (PDF) from the Ministry of Law Singapore.

Prospective cash loans applicants should be aware that cash loans in Singapore are intended for financial emergencies and are not sustainable financial solutions. This guide includes information about how to use cash loans responsibly, how much they cost, the application process and what to watch out for.

How does a cash loan work?

Cash loans are generally used to meet short-term needs, so they tend to be smaller loans that come with shorter repayment periods.

A cash loan works in a similar way to a payday loan or a cash advance. Customers apply for the loan amount they need, submit the required documentation and any supporting evidence outlined by the lender. This evidence usually includes a person’s NRIC, bank statements and other financial documents. The lender will then assess the application based on this information and provide the applicant with a final decision.

Online cash loan lenders can often complete the whole process with a very short turnaround time. There are also lenders who specialise in bad credit cash loans and provide loans to borrowers who might have less than “perfect” credit history.

How to apply for a cash loan in Singapore

There are a few things that prospective applicants should take into consideration before and during the application process. They should:

  1. Compare a wide range of cash loans online.
    Prospective applicants should remember to compare the fees and charges, the loan term length, interest rate, repayment schedule, turnaround time and any late fees they may incur. They should also check to make sure that they meet the minimum requirements outlined by the lender.
  2. Gather their documentation.
    They’ll need to prove their identity, income, address and ownership of their assets, among other things (depending on the lender) when applying online. Applicants should make sure that they have all the required information before applying.
  3. Apply online/in-store.
    After comparing options and preparing their documentation, customers can apply online, or in the case of some lenders, in-store at the lender’s branch. Remember that applicants need to be 100% truthful on their loan application, as it will form a legally binding small amount credit contract.

What to know before comparing cash loans in Singapore

Here are some criteria you should consider before applying for a cash loan:

  • Loan purpose. Some lenders have restrictions on what the borrowed funds can be used for. Applicants should keep in mind that they will need to list the purpose of the loan on the loan documentation.
  • The complete list of costs. Besides established fees and interest fees, there may be hidden fees involved when applying for cash loans in Singapore. Be sure to read all the required documentation to avoid surprise costs!
  • The eligibility criteria. Some lenders specialise in bad credit cash loans while others require a reasonable credit score for approval. It’s important for applicants to ensure that they meet the criteria set by the lender before applying.
  • The turnaround time. With the growth of technology, cash loans in Singapore can be applied for online. This means that some online lenders can transfer the loan funds within a few hours, which is an important factor if you’re funding an urgent expenditure.

        Pros and cons of cash loans

        • There will be a quick turnaround. Cash loans in Singapore are known for their quick disbursal and less stringent requirements.
        • The government has put a cap on fees. There are caps on fees and charges put in place by the Monetary Authority of Singapore, which help protect customers from disreputable lenders and gives them a definite repayment schedule within which they can repay the loan.
        • You will suffer from higher costs. The fees on cash loans in Singapore are more expensive than those available through traditional lenders due to their short-term nature and high fees. There is also no cap on late payment or default fees.
        • The loans have a shorter duration. Cash loans are used for short term financial requirements and have a shorter repayment duration. Shorter repayment periods also mean higher repayments, and these may be unaffordable for some individuals.

        Things to take note of when using cash loans

        • Borrowing unnecessarily. Due to faster processing and lower checks, cash loans in Singapore might give a feeling of “easy money”. This can lead to spending on superfluous items like gadgets or vacations with one of these loans. These loans should really be seen as short term solutions to financial emergencies only. Customers should really consider whether they can afford the repayments before they apply, and only take on the loan if they really need it.
        • Taking on too large of a loan. Customers should determine whether they really need the full amount for which they’re applying. A higher loan amount will mean higher ongoing repayments and may make it challenging for customers to manage and to repay.
        • Failing to contact the lender if you’re having trouble meeting repayments. If the borrower is going to make a repayment late, they need to contact the lender before the repayment is due. Not doing so will incur late payment fees, direct debit dishonour fees and default fees.

        And as always you should read the “Notes for Borrowers” (PDF) from the Ministry of Law Singapore if you are considering a payday loan.

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