“Personal loans” is an expression that we often hear but we don’t seriously think about it until we suddenly need one. Unexpected medical bills, surprise tuition fees or books, or simply being strapped for cash until the next pay period happens to everyone.

Unfortunately, unlike credit cards that supply an immediate line of credit from a swipe, personal loans take a bit more time to acquire and utilize. On the other hand, the repercussions of not paying it back in full or on time are much more serious. Here are the fastest ways to borrow money, essentially a short term personal loan, if you truly need it in an emergency.

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Personal Bank Loan

A personal bank loan takes a bit more time to fulfill the criteria before the bank will approve the loan. For example, you must be at least 21 years old, have a minimum annual income of S$20,000, and have a decent credit score. A short term personal loan tends to have a processing fee of about 2% to 5% with a loan tenure of one year. Therefore, this option is not ideal for someone who needs quick cash to pay an upcoming bill, as this locks you in repayment for at least a year.

Licensed Money Lender

A licensed moneylender is a legal way to get fast cash. The term “licensed” means that they have been approved by the Ministry of Law (MinLaw) and have a registration number issued by the Monetary Authority of Singapore (MAS). Be sure to check that your lender is legitimate, as many falsify this information to lure more borrowers. The approval process is faster and money lenders do not look at your credit history. Instead, they use the Moneylender Credit Bureau, which provides them with up-to-date details of the applicant’s creditworthiness and indebtedness.

They derive this evaluation from data about your previous unsecured loans with other licensed moneylenders. Money lenders are known for offering fast processing, usually within 24 hours, simple eligibility requirements, and some even offer debt consolidation. Similar to a personal bank loan, you must be at least 21 years old. However, their employment requirement is a bit laxer. You mainly need to be employed for at least 3 months and demonstrate a steady source of income. Naturally, money lenders have high-interest rates because the loans are fast and short-termed.

Cash Advance

A cash advance is a feature of your credit card. You can withdraw cash from an ATM or at a bank using your credit card instead of your debit or ATM card. This is giving you a short term loan, as opposed to using the cash you have in your bank account. The amount you can withdraw is usually a percentage of your credit card limit. This advance is known to have interest rates that are higher than the normal rates that apply to your card, charge you a transaction fee, and usually accrue interest the day you withdraw. There is no grace period like your credit card has. This means that you may still end up owing interest even if you pay back the amount you borrow the next day.

Moreover, if you use an ATM in a foreign country to make a cash advance, you could also face a foreign exchange fee. Cash advances are especially dangerous because you end up paying a lot of interest before you can pay back the debt. As a result, this is usually a last resort.

Peer-to-Peer Lending

Peer-to-Peer or P2P lending started in the US and UK over a decade ago. It is a relatively new form of lending that has grown popular in the Asian market. Regulators are still trying to manage this new beast because this lending method eliminates an official financial institution as an intermediary.

Currently, P2P lending is only available for companies and ideal for an SME (Small Medium Enterprise). SMEs usually struggle to get a bank loan for a variety of reasons, such as they don’t have a long enough operational history. The lenders absorb the risk of lending to a smaller company. As a result, interest rates are often high, but maybe a good option for a small business.

Other Tips

Payday loans are some of the worst kinds of debt. It gets its name because the borrower has until his next payday to pay back the loan, plus a fee, and any interest incurred over that time period. If you fail to pay it back on time, you incur another processing fee to “roll over” the loan until the next payday. These loans are extremely easy to get and don’t assess the borrower at all. At times, they offer the same day or even instant approval online. These loans are notorious for having astronomical interest rates of up to 300%! Furthermore, many of these online payday loans or bad credit loans are scams. Their main goal is to get access to your personal information.

There are many scammers trying to prey on people desperate for money. Be wary of lenders who ask you to pay upfront application fees prior to providing the loan to you. At times, they deceivingly claim that is is a mandatory processing fee for all borrowers or claim that it is required collateral due to your bad credit. Once you supply your bank account details to transfer the fee, the moneylender will disappear. Legitimate lenders will NEVER ask you to pay anything before you receive your loan.

Final Thoughts

When you are in desperate need for cash, there are a few options available. As always, the shorter the loan, the higher the interest rate. Never take a loan that you cannot pay back the monthly installment. Always pay it off as fast as possible. Remember, this is a temporary loan to help you in an emergency. After you are out of debt, try to budget well and create an emergency savings fund to avoid this happening again.