A Complete Guide: Everything You Need to Know About Personal Loans
Saving money for contingencies is a challenge not just for some but for everyone. Let’s face it, saving money is not as easy as it seems. If you don’t have enough savings and an immediate financial challenge arises, a personal loan is often the best choice.
The amount of money you might borrow depends, of course, on your needs. But the capability to pay off the borrower should always be kept in mind. Continue reading to learn more about personal loans in Singapore.
What is a Personal Loan?
A Personal Loan is a type of loan made to when you are in need of cash for expenses that are unexpected but don’t require a speedy approval. The time that it takes for a personal loan to get approved depends on the moneylender that you choose, such as Singa Credit PTE LTD. Scenarios like weddings, vacations, honeymoons, travelling and educational fees are where personal loans might be used.
A personal loan takes time to be approved since there is a need to check the credit ratings or score of the borrower from a credit agency. The application also involves a background check and submission of personal documents to be completed before it is processed. People who are looking for secure loans go for personal loans but those with bad credit often shy away from this process knowing that there is no chance for approval.
Types of Personal Loan:
There are three types of personal loans:
Term Loan is a type of loan that has a fixed period of payments agreed between the borrower and the lender; usually a bank. Term loans involve fixed amounts to be paid over an agreed period of time depending on what is stated in the contract.
The second type of personal loan is the revolving loan, or also referred to as a personal line of credit. This type gives the borrower the freedom to use it at any time until they reach the limit line. The borrower is allowed to reuse the limit line any time after returning the borrowed amount.
The third type is the balance transfer scheme wherein the borrower who has several loan balances in different banks may choose to consolidate the amounts in one bank for better management and less interest.
How to Avail a Personal Loan?
The age requirement is between 21 to 65 yrs old. For a Singaporean national, the annual salary requirement is usually at least $30,000 per annum. A few banks allow less than $30,000 annually but for a higher interest rate. For foreigners wishing to apply for a loan, an annual salary of $40,000 to $50,000 per annum is required depending on the bank.
Documents Required in Acquiring a Personal Loan
- Singapore Identification Card or Employment Pass + Passport for nationals
- Reports including your residential address to show proof of residence such utility bills with your name and address
- Your Latest 12 months’ Central Provident Fund contribution history statement or Latest Income Tax Notice of Assessment or Latest Computerized Payslip or Salary Crediting into the lender’s bank account to show proof of income and ability to pay
It’s worth noting that with a personal loan, one can borrow more than $20,000 via and may pay said loan over 1 year or more. It should only cost you about 7% interest at most per annum, but be sure to shop around to ensure that you get best loan offer available.
A Few Things to Take Note of when Considering a Personal Loan:
- Personal loans are cheaper than payday loans but it still depends on the situation as to why the borrower needs the money.
- If your credit score is good and you can afford to repay the loan in monthly installments, personal loans schemes are for you. A default on a personal loan can look bad on your credit score, which will affect you in the long run.
- Consider other borrowing options such as a credit union, a friend or a local bank instead of a commercial bank for lower interest rates. You can also check some websites for trusted money lenders.
- Personal loans are suitable for a wide range of purposes. Consider use it for life goals or acquiring assets instead of buying things that are not helpful for profit generation or things that are of no value.
- Use the money to increase your income. Start a new business, enroll in a training program to better yourself, or pay off your credit card bills. Use the extra cash from the personal loan to improve your status instead of being drowned in a sea of debt!
We hope you enjoyed our guide to personal loans in Singapore. If you’re looking for a licensed money lender in Singapore then read our reviews to find the best company for your needs.