How Personal Loans Singapore Work
Loans, by far, have proven the best ally for any financial difficulty.
Financial institutions like banks and moneylenders offer a wide variety of products and services.
There are business loans, education loans, payday loans, personal loans, and so much more. It is all up to you which among the loans available to take out.
Besides, personal loans are the foremost trusted by people. They say it solves their urgent money problem.
To better understand why borrowers look forward to it, let’s learn how personal loans work in Singapore.
What is a personal loan, anyway?
A personal loan is like other loan types. Borrowers take out a certain amount of money from either a bank or a lender. Then, you utilise the funds to pay for whatever things you need. Afterwards, you pay it off on the agreed loan tenure.
But what sets personal loans apart from others is the flexibility. The loan cash can settle a range of expenses. It can be your medical emergencies, vehicle repair, education fees, wedding expenses, or even debt repayment.
Name your financial issue; a personal loan can solve it for you. Yet, quick cash comes with an interest rate. So see to it that you engage with reputable banks and legit money lenders for a competitive rate.
Furthermore, a personal loan comes in two types: secured or unsecured.
Secured Personal Loans
A secured personal loan requires borrowers for some collateral. It guarantees the financial facility that you will repay your loan. Or else, you’ll lose the asset you used as a surety.
Banking institutions and money lending companies accept several collaterals. It can be your cash assets or physical assets.
Cash assets include a savings account, a certificate of deposit, and more. In contrast, physical assets can be a vehicle, property, jewellery, and the likes.
Failure to pay off the secured loan or default means your lender can keep the collateral.
Unsecured Personal Loans
Contrary to the first type, an unsecured personal loan does not need collateral. As a result, borrowers can take out the loan without the risk of losing property.
Banks, moneylenders, and credit unions also offer this type of loan. But banks often collect a higher interest rate. All because unsecured loans are a lot riskier than the secured loans.
With the knowledge about personal loans in Singapore, let’s dig deeper into how it works.
How does Personal Loan work in Singapore?
Personal loans in Singapore help your finances in both the short-term and long-term. Nonetheless, you have to comprehend if you have what it takes to apply for it.
When taking out a personal loan, banks and lenders assess if you’re suitable for it. Aside from being eligible, they check if you can repay on time. Your credit score plays a significant role in your approval.
Once you get approved, you have to review the loan contract. Make sure everything is crystal clear. The loanable amount, loan tenure, repayment scheme, interest rate, and other fees are comprehensible. Financial institutions vary when it comes to these details. You must know all the information about your loan.
After signing the contract, you will receive the funds for the loan. It can be through direct deposit into your account or on a cash basis.
But it does not stop there. A diligent borrower repays the loan based on your loan agreement. In return, it lifts your credit score the healthy way.
Just like that, you can fund your family vacation abroad or the moving expenses. So, why is it necessary to take one out?
Why get a personal loan in Singapore?
Singaporeans favour personal loans for the following reasons.
Always Available
Banks and money lending facilities have a fast process. More often than not, application and approval take within a week. But if you’re credible and have an excellent record, same-day approval is possible. That’s why a personal loan is the best choice during an emergency.
Unsecured
Being unsecured does not mean it’s unsafe; instead, it’s the other way around. Unsecured personal loans help you keep your possessions. The consequence of not repaying the debt will reflect on your credit history. It is far different when you fail to pay off your mortgage back.
Fixed Interest Rates
Often, personal loans are fixed interest rates. Thus, you don’t have to worry about a sudden add-up in charges. Also, it is a lot safer than credit cards, wherein interest rates hike as the balance increases.
Personal loans in Singapore are genuinely beneficial. So, it’s no surprise why many opt for this kind of financial help.
When is the right time to get a Singapore Personal Loan?
The need for a large sum of cash may come from various reasons. It can be a desperate moment or not.
Family Emergency
If you or any family member is in dire need of money, Singapore personal loan can be your best bet. The instant cash loan aids in paying whatever bills or repairs your family demands.
Medical Emergency
Your insurance may cover costly medical treatment. But home medications and follow-up fees are another financial despair to consider. As a solution to this, borrow a personal loan from banks and legal money lending companies.
Wedding Bands
Wedding preparation takes time, effort, and money. Aside from the church, gowns and suits, and reception, securing wedding bands is your top priority. But how can you do this if you lack sufficient funding? Fortunately, Singapore personal loans help finance this vital matter.
Travel Expenses
Travelling is an enjoyable yet pricey leisure activity. Luckily, quick loan cash can cover up the costs for you. Receive your accommodation and tickets with it. Plus, it can even suffice your pocket money.
Credit Card Payment
Credit cards have a lot of perks. Yet, many fees entail it. So, save yourself from digging into your financial grave. Approved personal loans can pay off the nearing due date.
Education Fees
Parents and students face financial struggles for their studies. But with instant cash, tuition fees and textbooks are more affordable.
These are just some of the reasons why you should take out a loan. As long as you’re in trouble with finances, a personal loan is a top choice. But, regardless of your reason, any credible individual can apply for it.
Business Matter
Business people in Singapore support their business operations with short-term business loans. It’s one way you can never hurt your business’ money when things turn out unfavourably. Thus, it keeps your business’ income afloat while you support your finances with personal loans.
Where to apply for a personal loan in Singapore?
Personal loans in Singapore are almost everywhere. So, applying for it is convenient for anyone in need of urgent cash.
Banks
One of the first places to check is your credit union or current bank. As of today, the majority of banking facilities offer this type of loan. Talk to your banker about the available loans. Find out which among them qualifies you.
Moneylenders
Also, there are many reputable money lending companies present in Singapore. Shop around and assess if the lender is licensed or not. Watch out for lurking loan sharks. Remember, you take out a loan to overcome your financial trouble. But not to dive into another pool of debts.
To be safe, you can refer to the official list of licensed moneylenders in Singapore. In addition, you can visit the Ministry of Law Singapore’s website. All these licensed moneylenders abide by the Moneylenders Act; a law provided to regulate the lending industry.
Whichever you plan to take out a loan, always pay attention to specific details. Ask about the interest rates and fees included in a personal loan. Find out if the borrowing limits and collateral requirements are acceptable for you. Most importantly, check if you can meet the repayment terms laid out for you.
Personal Loans Pros and Cons: Banks vs Moneylenders
Banks and moneylenders are both excellent sources of financial help. But which between the two is the right choice for a personal loan. First, let’s differentiate the perks and downsides of the two.
Eligibility Requirements
Banks extend the personal loan service to Singapore citizens, permanent residents, and foreigners. Yet, it requires an annual income of more than $20,000. So, unfortunately, it is not attainable for many.
Meanwhile, trusted moneylenders have a faster approval rate. Also, they have fewer restrictions. As long as you get qualified under the citizenship and income category, you can bring it home. Fortunately, it’s easy to attain.
The loan amount you can take
Generally, money lending facilities offer only small loans. However, you can take out cash from a few hundred or up to $3,000.
Banks, on the other hand, offer higher amounts for personal loans. For example, you can borrow at least $10,000.
The loan process
Typically, personal loans with licensed moneylenders have a faster transaction. You apply in the morning, get approved in an hour, then receive cash by noon. It won’t take much of your time to receive your emergency cash.
But banks have an agonising loan process and tedious requirements. Also, scrutinising your credit history takes time. Thus, delaying the cash disbursement you need.
Interest Rates offered
Comparing the interest rate between the bank and a moneylender is genuinely competitive. Some lenders offer interest rates that are higher but relatively reasonable. But some money lending companies offer low-interest personal loans. For others, banks have a whopping interest you cannot deny.
Nonetheless, both the bank and moneylender have a way of helping your finances. Just make sure you focus your loan on a specific purpose. Then, afterwards, fulfil your financial obligation for the repayment.
Personal loans in Singapore work like magic. It does not only help you get through the last week of the month. Instead, it pushes you to achieve your goal and solve the financial dilemma.
Are you in need of extra money? Cash Mart Singapore can help you! Loans are at a low-interest rate, you can make applications online, and you get approval within a day.