There are many reasons why we need to borrow. Usually it’s for emergency need which one need to get ‘instant’ cash for fast turnaround.
Moneymoney.sg list down the type of loans and the difference between them. Borrowing money is often not seen as glamorous thing to do (..maybe other than a housing loan). Hence we included the ‘Face’ factor for comparison too.
| Type of Loans | Waiting Period | Amount | Interest Rate | Face’ Factor |
| Cash Advance | Instant. As long it’s within available credit limit | Up to available credit limit | 24%p.a and above. | Low. No one knows |
| Secured Loans | 2 weeks or longer | ~70% of your collateral | Prime rate (~6%) + spread | Low. |
| Friends | Range from instant to outright reject | Can be substantial if you have many friends who are willing to support you. | Most probably is zero. | High. Your best friend may turn into a different person when it comes to borrowing money. |
| Pawnshop | Instant. If you have jewelleries or watches | A certain percentage of the value of the item | Ranges. From 12%p.a. to higher | Medium. Some pawnshops are getting ‘hip’ with celebrities advertising for them. |
| Licensed moneylender | Instant. | Depending on your salary | Ranges from 12%p.a to higher | Low. Most lenders are discreet in their dealings. |
Cash advance and secured loans are relatively discreet and ‘face’ factor is low. The interest will varies from Prime rate for secured loans to 24%p.a for unsecured.
Borrowing from friends probably will give you the lowest interest rate as most friends will be happy to just get their money back. However, you will need lots of ’face’ (courage) to approach them tactfully.
Pawnshop is good if you have valuable things to pawn. The pawnshops are getting more ‘hip’. ‘Face’ factor wise is medium as you may bump into people you know.
Licensed moneylenders are discreet and some even provide off-site appointments. The interest rates are explained to you in details. You can even ask them to calculate the effective interest rate for you.
Do consider other factors such as late payment fees. Most importantly,
“Borrow what you really need and are able to pay.”
