In life, there may be times when you may need a short term personal loan for an emergency or to pay off a long-overdue bill.

In this article, we will look at what we can use a short term personal loan for and some things you should consider if you are going to take out such a loan. 

Read on to find out what to look out for. 

What Is A Short Term Personal Loan?

As its name suggests, a short-term personal loan is offered by a bank or lending institution for a short time frame. Mostly, bank short term loans have a maturity period of up to a year. 

However, this period may be extended to two years at certain lenders.  

What Can It Be Used For?

You can use a short term personal loan for home repairs, debt settlement, wedding expenses, and even vacation costs.

However, such loans can be pretty challenging to obtain since they require solid evidence of your ability to repay the loan.

Interest Rates Of Personal Loans

Banks and licensed money lenders provide personal loans in Singapore. 

While the former provides cheap interest rates ranging from 3-6% per year and are able to grant small to large loan amounts, they have a lengthy approval process. 

To secure a bank’s loan approval, you need to have a solid credit score or rating. 

But a low interest rate should not be your only consideration. It is crucial to ensure you are able to afford the monthly installment for a short-term loan. 

Pros And Cons 

Let’s look at the benefits and disadvantages of a short term personal loan. 


They Offer Flexibility 

Short-term personal loans are unique compared to housing loans. A major benefit is that you are free to spend the money in any way you see fit. 

You can use it for marriage, education, debt settlement, home renovation, travel, or to start a business.

Short-term loans can be customised to suit your needs in terms of repayment choices and interest rates. 

Boosts Your Credit Score 

If your credit score is poor, you can use a short term personal loan to improve your credit score or rating. 

This will make it possible for you to get a larger loan from a lender in the future. You may be able to enjoy an extended repayment period and larger loan amount. 

As long as you keep making timely payments toward the short-term loan, your credit score or rating will improve.

You Get The Money Quickly

Short-term loans are usually disbursed fast by most lenders. This is why they are so convenient. 

You Don’t Stay In Debt For Long 

The point of a short-term loan is to repay it quickly – usually within a year. This means you won’t stay in debt for a long time, as long as you can repay the loan. 


It’s Costly In The Long Run

Short-term personal loans often have a higher interest rate than long-term loans. As you are financing the principal debt over a shorter time, you pay more each month.

Higher Penalties In The Event Of Default

Since the interest rate of short-term loans is high due to the short repayment period, the penalties for late payments are typically quite harsh.

High Chance Of Taking A Short-Term Loan From A Loan Shark 

If you aren’t careful, you may end up taking out a short-term loan from a loan shark. These illegal money lenders impose exorbitantly high interest rates and other fees on their customers. 

How To Choose The Right Repayment Plan

Payday loans and other types of short-term loans might mess up your finances if you do not make your repayments on time. Late payments or defaulting is one reason short-term loans can become pricey. 

To avoid late payments and defaults with a short-term loan, follow these tips to choose the right repayment plan: 

Do Your Own Calculations 

To determine if you can meet a lender’s repayment terms, you should determine the repayment amount first. Be very clear about this. 

The next step is to calculate if you can repay in full every month. If not, ask your lender to extend your repayment period. 

Even if you pay more interest, it is important that you can pay your other monthly expenses comfortably. If the conditions of your current loan are not acceptable, switch to a different lender.  

Interest Rate 

The interest rate on a personal loan from a licensed money lender cannot be more than 4% per month. You may obtain the most affordable interest rate by comparing offers from several licensed money lenders. 

Note that the effective interest rate (EIR) is more important than the stated interest rate when choosing a loan. 

The EIR is sometimes referred to as the actual interest rate because it factors in all applicable fees and costs.

Loan Amount

Borrow only what you need and can afford to repay. Choose a low interest rate, but take your financial situation into consideration when it comes to the loan amount.

Loan Tenure 

In most situations, you must pay off a short-term loan within six months to one year and no more than 18 months. Any loan period that is longer than that is termed a medium- or long-term loan.

Where To Get A Short-Term Loan

In Singapore, you may get a short-term loan from various financial institutions. You can go to  regulated money lenders, banks, or private funders. 

If you can’t get a bank loan, but are short on time, you can get a loan from a legal money lender. Licensed money lenders can lend you up to six times your monthly pay. 

Before applying for a loan, you need to consider all of these possibilities since each comes with its advantages and disadvantages. 

Choose A Short Term Personal Loan Wisely 

Several factors determine how much you can borrow. The amount of the loan depends on which bank or money lender you apply to. Your salary and credit score are crucial too. 

That said, your application may still be rejected due to bad debts or repayment records even if you have a high salary. 

The bank may also reject your application if you simultaneously apply for more than one loan. 

However, if your application is accepted, the approved loan amount may be lower than the amount you specified in your application. 

This is primarily because the bank will think you need money quickly if you apply for more than one loan, which will be a risk for the bank. You can discuss other options with the bank representative if you are not satisfied with the approved loan amount.

Some short-term loans can be a better option for you than others, depending on what you need the money for and your credit history. 

With the help of licensed money lender Credit 21, you can make comparisons of the most satisfactory interest rates for short-term personal loans. This will help you choose the loan that is most appropriate for your circumstances.

You can count on us for transparency, fairness, and convenience when it comes to providing you with funds in a short time. 

Our customer service representatives are standing by to answer all your inquiries. 

Contact us now to get one step closer to receiving a short-term personal loan or apply now.