Many people do not realize how easy the process of applying for personal loans is. But most are often asking about how one can qualify for a personal loan in Singapore. Personal loans are unsecured types of loans, meaning that they do not require any form of collateral. Therefore, the moneylender will not have access to your assets should you to repay the borrowed money.
Generally, the requirements for getting a loan is rather easy to meet. The more strict requirements apply to foreigners and will vary from lender to lender. Usually, a valid pass of employment will be required.
Why Take A Personal Loan
A personal loan may be a good source for a relatively big amount you might need suddenly. Though it is not advisable using long-term financing for funding short-term needs, personal loans are still a more preferred option compared to credit card debt. Especially when you urgently need money now.
There are countless instances where you could encounter a financial emergency. It could be you suddenly require an expensive medical treatment of which you do not have the money to pay for. It can be that you require to put in a wedding down payment.
Nonetheless, when you are not able to access a large sum that you require urgently, personal loans may be a great way to solve your financial problem in the short-term.
Personal loans may be used for consolidating your existing debt into a single manageable account that you pay a monthly fixed amount at an affordable rate. However, interests and other terms may vary greatly depending on your yearly earnings and other factors.
What Do I Need to Apply for A Personal Loan
In order to qualify for a personal loan in Singapore, you should be aged between 21 – 65 years. The next step after meeting the age criteria, any reputable moneylender will inquire about your yearly income. Most lenders will require a borrower to be earning about S$30,000 in yearly income. Even though other lenders will offer loans to individuals who earn less than S$30,000 but at higher interests. As for foreigners, the annual income criteria may increase from $40,000 to S$60,000 that is depending on the moneylender.
As for the documents needed, you are more likely to be asked to present the following paperwork to your moneylender to get approved:
- Proof of Residence: Documents required include your residential address (that is utility bill containing your address and name)
- Identification Documents: Singapore ID Card (IC) or Pass of Employment (EP) + valid Passport
- Income statements: the most current 12 months’ CPF (Central Provident Fund ) contribution statement or the most current Income Tax NOA(Notice of Assessment) or latest Payslip or Wages Crediting into your lender’s account
Tips on Taking a Personal Loan
- Consider Other Charges and Fees
Other than the representative interest rates, consider the other charges and fees. Some types of fees to look at include late fees, processing fees, pre-payment fees, and even restructuring fees.
- Only Borrow The Amount That You Need and Can Repay Quickly
Realize that having a longer loan tenure means the interest rate will be greater.
- Confirm Your Credit Score
Keep in mind that with some personal loans, a borrower may only receive the low rate when they hold a good credit standing. You will be able to work on the credit profile once you check your rating. You can request a copy of the credit report from the Singaporean Credit Bureau at the cost of S$6.42.
- Utilise Loan Calculators
A loan calculator is handy tools which will assist you in figuring out the installments you will have to pay.
Although taking out a personal loan may not seem as hard as it appears, you need to always look carefully at your financial situation before getting any debts. Have a look at the below personal loan checklist to assist you in determining if you really require the additional loan to take on.
Is the Personal Loan Suitable For You?
As you consider getting a personal loan, it is also important that you look at whether this would be a suitable option for you. Even though they are better when compared to a credit card, a personal loan still will attract a relatively high price. Thus, below are some pointers and advice for people who wish to get a personal loan.
Always make sure that you can repay it before borrowing. Failing to pay back your personal loan could really affect your credit score. In turn, this can have major consequences later in the future. You can take out a personal loan to cover a vacation or wedding provided that you are certain that you can manage the payments.
Also look at other lending options such as borrowing from friends or family. Or, when you have a healthy credit and even a present banking relationship, then you could check with your lender to see whether they are offering better choices at your local credit union, moneylender or bank.
Consider borrowing to consolidate your debt when you want to get a fixed payment for each month at a rate that you can easily afford to assist you in managing your credit. Other than help you pay down existing debt, a personal loan will assist you to be debt free a lot more quickly.
As soon as you have established that a personal loan is an ideal option for you. Make sure you know the amount that you will be required to pay each month. Also, make a point to manage your budget for each month to enable you to cover the loan repayments on time. Often times personal loans come with fixed, and regular monthly installments. Therefore, you will be aware of what to expect while you manage the working budget.
a personal loan may be a good source for a relatively big amount you might need suddenly. Although many Singaporeans may not realize this, in general, the requirements for getting a loan are rather easy to meet. Even then, always consider if the personal loan is the suitable credit option for you. Importantly, only borrow what you need and repay it on time and in full.