A cash loan is money borrowed to be repaid later and there are factors which distinguish different cash loans. They offer the advantage of instant loan approval in Singapore which provides a great solution for anyone who faces any financial emergencies. You should have a good understanding of the different options before choosing the type of cash loan that will be suitable for you.
Time of maturity
The maturity of a loan is described as the length it will take for the loan contract to be fully paid. Loans are classified either as short-term, intermediate-term or long-term loans. All cash loans are usually short-term, such as payday loans, which should be repaid by a borrower’s next payday. The cash loan maturity depends on the terms set by the lender, but sometimes clients with good credit history may get to negotiate their way around the time of maturity of a loan.
Repayment schedule
Loan repayment can be set at a specific time or they can be paid at intervals. Most loans are set to be paid monthly. A cash loan has two main portions to be paid, first is the principal amount and the second is the interest. The principal amount is amortized until it is retired and the interest declines. If a borrower chooses to pay the interest amount on a loan, they will need to pay the principal amount in a one-off payment.
Interest
Every cash loan attracts interest, which is the cost incurred in borrowing money. Money lenders ensure that they charge interest rates that cover their administrative costs and operating costs, but at the same time, an interest rate that will allow an acceptable rate of return. Interest rates are sometimes fixed while other times they can be adjusted based on the changes in market conditions, differences in loan terms or the creditworthiness of a client. A lender might adjust the interest rates in intervals or according to the market index.
Security
Some cash loans require collaterals such as assets while some will take a regular paycheck as security. For businesses which register profits every month, they can use it as security for a loan. Sometimes the item purchased with the cash loan can be used as collateral.
Personal loans do not have to be secured and they depend on the credit history of the clients. A personal loan is given after providing their proof of income. They have a short maturity period and their interest rates are high. Personal loans are expensive, but they are the best way to solve cash emergencies when small amounts of money are involved.
Payday loans are characterized as short-term loans because they should be paid on the next paycheck. The interest rates are usually high on payday loans.