Businesses require funds from time to time to maintain their cash flow, especially in the event of an emergency. The same is true for individuals who need extra money every now and then to finance unforeseen expenses. For these kinds of financial needs, instant cash loans are of great help.
A loan is a sum of money that a company or individual borrows from banks and other financial institutions for the purpose of financially managing both planned and unplanned situations. Different types of loans exist, and their modes of repayment also differ. Typically, borrowers are given two options when it comes to paying off their loans: single payment and instalment. Read on to find out how these types of loans differ from each other.
What is a single-payment loan?
A single-payment loan is easy to obtain, and it often comes with fast loan approval in Singapore. Essentially, a single-payment loan is one that you repay with only a single payment at the end of an agreed-upon period of time. The loan’s maturity value is the overall amount you need to repay, including the principal amount and any interest you may incur. To put it simply, when you obtain a single-payment loan, you are required to pay the entire amount of the loan the moment it matures.
Pros and cons of a single-payment loan
A single-payment loan may sometimes serve as a cash advance loan that can help you with sudden and unexpected financial needs, such as medical emergencies and business problems. There are many good reasons why a lot of people are convinced to get a single-payment loan, especially in times of emergency. Here are some of them:
- Single-payment loans are a great way to fill in the gap in your everyday finances.
- A single payment is a great option if you are in need of money right away and you know that you will have the funds available to repay the entire loan amount soon.
- Since single-payment loans are simply priced, the overall amount of payback is always upfront or known.
- Single-payment loans mature on a specified date, so you do not need to pay additional interest over time.
On the other hand, here are some disadvantages of getting a single-payment loan:
- Single-payment loans usually have a higher annual percentage rate (APR) compared to instalment
- Borrowers of single-payment loans have little flexibility if unforeseen expenses arise.
- If you cannot make full payment on the specified date, you will need to borrow again, which consequently costs you way more than what you had initially planned.
What is an instalment loan?
Instalment loans are the opposite of single-payment loans. Unlike a single-payment loan, an instalment loan is paid over time and accrues interest. It provides a borrower with a fixed amount of money that should be repaid on a regular schedule. The interest rate for this loan typically varies and depends upon several factors, such as the amount of the loan, your credit score, and your loan history. The period for paying off an instalment loan can be as little as a couple of months or as long as a few years.
Pros and cons of an instalment loan
Instalment loans enable borrowers to obtain a predetermined amount of money, which is disbursed in a lump sum and can be repaid over time. Like single-payment loans, there are several benefits that come with getting an instalment loan. Here are some of them:
- The amount of monthly payment becomes more manageable when you break down the repayment into
- The cost of the loan can be lowered by paying off the loan early or paying an additional amount.
- Every loan payment you make helps establish your credit score and loan history.
On the other hand, here are the drawbacks of obtaining a loan via instalment:
- Getting a product on an instalment basis may come with a higher overall cost than a single-payment product.
- Instalment loans may charge a prepayment fee if you pay off the loan in advance or before the maturity date.
- Some instalment loans do not report customer payments to major credit institutions or bureaus.
Conclusion
The principal difference between single-payment loans and instalment loans lies in their mode of repayment. If you require immediate financial assistance and think you can pay off your loan at once in the future, then a single-payment loan is ideal for you. On the other hand, if you have other expenses that must be taken care of while you repay your loan, an instalment loan is your best option.
For the most reliable and hassle-free financial assistance to help meet all your financial needs, Orange Credit is the money lender you can trust! We offer a variety of flexible and legitimate easy cash loans that you can use for a number of purposes, such as for dealing with a personal emergency or addressing a business requirement. Feel free to contact us today to find out more about our financial services.
