Stacks of coins multiplying as a result of strategic saving in an emergency fund

Should You Dip Into Your Emergency Fund Or Get A Cash Loan In Singapore?

4 min

With the regulation of licensed money lenders, getting a cash loan in Singapore is easier and safer than ever before. However, many Singaporeans still use their emergency funds when they are short of cash. This is often because cash loans are seen as incurring debt while savings are not.

It is a simplistic approach and one that may have a detrimental effect on your finances in the long term. If you are torn between applying for a quick cash loan in Singapore and using your rainy day funds, read this article before you decide.

Is it an emergency?

The first assessment to make is whether or not your situation qualifies as an ‘emergency’.

Take, for example, the case of someone deciding whether or not to buy a new car. In almost every case, that would not be considered an emergency purchase. The exception is if the person is a taxi driver or Grab or Gojek private car driver. If the earnings from his or her vehicle are their primary source of income, a car may certainly be considered an emergency purchase.

Cash Direct offers a Grab/Gojek/Taxi loan specifically for people in this situation. If you fall in this category, it makes sense to apply for a cash loan in Singapore instead of dipping into your emergency fund. The money can be used to buy a car but also for other relevant costs such as maintenance, repairs for accident damage, and insurance.

What do you lose?

Many people keep their savings and emergency funds in high-yield accounts. This may be in the form of fixed deposits or even a salary bank account. The terms and conditions are usually consistent here – any withdrawal before a set date negates all the interest accrued prior to the withdrawal.

Not only do you spend the money in the account so it cannot accrue any more interest, but you also lose out on what you had already gained.

It is the same with stocks and shares. These are long-term investments that have the potential to grow significantly over the years. Cashing out on them today squanders all the potential earnings away in an instant. Are you willing to sacrifice it all or are cash loans the better option?

What do you learn?

A loan is not simply a matter of cash changing hands; the move demands discipline on your part. It takes dedication to honour your loan commitments. You will develop a sound understanding of your financial circumstances, the knowledge that will spread to your overall fiscal reality and guide your spending behaviour.

What you learn when you take and repay cash loans cannot be learned through reading or hearing about it.

On the other hand, dipping into your emergency fund is a break of discipline. It is the easy way out of a temporary setback that does not teach you anything about how to handle money. Worse still, it could lead to a damaging domino effect on the rest of your savings.

The Domino Effect

Perhaps the worst consequence of using your emergency funds is the psychological impact of taking that drastic step. Creating an ‘emergency fund’ has no real value if you crumble every time money is tight. It makes a mockery of all the discipline and self-restraint that you displayed by not touching it before.

With the spell broken once, you will be exponentially more likely to break the piggy bank in the future. Are you willing to accept that scenario or is a quick cash loan in Singapore the better way to go?

Using emergency funds

Many people use their emergency funds instead of a cash loan in Singapore because of three main reasons:

  • No interest – You are using your own money, which does not incur any interest
  • Credit scores are immaterial – There is no assessment and approval process to use your own emergency funds
  • Instantaneous – Besides the time it takes to withdraw the emergency funds, there is no waiting involved

Making the decision

With the right licensed moneylender, you can save your emergency funds and still have additional cash.

When you apply for a quick cash loan in Singapore at Cash Direct, we can make an assessment and provide initial approval within minutes. With our generous eligibility criteria, we approve people with low credit scores who have had loan requests rejected by their banks.

If you would rather hang on to your emergency funds but need quick cash, talk to us about a cash loan in Singapore today.


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