It can be difficult to understand the different types of loans available. There are approved lenders who offer loans with a variety of terms, and each type has its pros and cons. There are a variety of loan options to choose from and you might get a headache just deciding which one to get!

In order to help you simplify this process, we have put together a guide with explanations of the most common types of loans than any Singapore authorized money lender has to offer so that when it comes to making your decision there is less confusion.

What are the different loan options?

There are approved lenders that offer all types of loans, but for simplicity, we’ll focus on the common loan options that most approved lenders offer:

Payday loans

These are small, short term loans with high monthly payments. You get a quick infusion of cash until your next paycheck arrives, and you pay it back when you get back to work. The IR or the interest rates can be very high, so it is best to use this type in an emergency situation or if you have no other options.

A payday loan should only be taken out to cover expenses such as rent, food costs, or critical medical bills, as there might not be enough left after paying off the loan to live comfortably until you receive the next one. paycheck.

Short term loan

These are for those who may not be able to wait for their next payday and are in need of cash immediately. Borrowers pay a higher rate because approved lenders offer high interest rates with this option in order to offset the short term risk involved.

Lines of credit (LOC)

Letters of credit are similar to credit cards in which approved lenders allow borrowers to borrow from what is available in their account as needed without having to reapply for each new purchase or loan request. A range of rewards cards can also offer bonuses like frequent flyer points, cash back programs, accessorized products like handbags, sunglasses and more!

Personal loans

This can help people when they want funds available only from one source and are ready to borrow from approved lenders for larger amounts as there will be no competition between approved lenders. Personal loans usually come with lower monthly payments than other types of approved lenders.

Unsecured loans

This licensed money lender option is the most popular among borrowers and licensed money lenders because it is available to people with bad credit. The interest rate for unsecured loans is usually higher than that of a secured loan, but not as high as that of short-term approved money lenders.

Secured loans

These approved lenders offer lower interest rates in exchange for collateral such as property or equity in their home. If you are unable to make your monthly payments, the collateral will be forfeited until repayment of all unpaid debts owed to that particular approved loan provider has been made.

Student loans

These licensed money lenders are for those who want to borrow a large amount of money with low monthly payments. These approved lenders typically provide loans in the form of interest-free student credit or subsidized loans that pay no interest until graduation, when they then start at a fixed rate and are based on the type of loan you are borrowing. have borrowed.

Which approved lender you choose should depend on the type of loan you need, when your next paycheck is due, or if it is an emergency.

Why is it important for me to understand their differences?

The importance of understanding the differences of each loan is that certain types of loan may not be suitable for your current situation. What may work for one individual may not work as well for another.

It’s also important to consider what you’re looking for from an approved lender, how much time you have before your next paycheck, and whether it’s an emergency when deciding what type of lender. approved accompany your needs.

Which loan option is right for my needs and financial situation

While there are several loan options, you cannot have them all. It would be ideal if you narrowed down your loan options so that you only select the right approved loan provider for what you are looking to accomplish and how you work financially.

When should I start considering a loan?

If you are considering getting a licensed loan, it is important to determine when you will apply for the loan. Asking for or taking out a loan is a big decision, and approved lenders won’t just give loans without understanding how you plan to use the funds.

If it is an emergency, you will need to deal with it before applying for a loan, as approved lenders may have more stringent requirements. Another tip, when considering when to apply for a licensed loan, there are two main options: payday loans or personal loans. Payday loans can be used soon after your next payday while personal loans give you more time but must meet certain conditions to qualify on certain occasions like bad credit, filing for bankruptcy etc. .