Indeed, achieving financial stability is not an easy task. As such, doing steps to secure your future is very important. It can be starting up a business or investing in your children’s education. In the beginning, this will start with a price. However, it can generate bigger rewards soon.
Luckily, there are many ways to help you leverage your financial goals. Taking personal loans is one easy way to finance your investments and secure your future. However, before committing on a loan, here are steps on how to take out a personal loan in Singapore:
Ask Yourself the Reason for a Personal Loan
You might have considered applying for a personal loan Singapore for big purchases. However, this can also be used in other things. You can use it for home renovations, emergency funds, wedding prep, education, and others.
Personal loans will help you get off the debt cycle since personal loans have lower interest rates versus credit cards. With the right plan and interest rate, you can pay less than what you have paid through your credit card. Thus, this will help you save money.
Moreover, personal loans will also help you in times of emergency. It can act as a financial buffer to help you get through the hard times.
Know the Kinds of Loans
It is important to know the pros and cons of each type of loan Singapore. With this, you can identify which one will suit your needs.
Secured loans will require you to have collateral. This is the lender’s guarantee that in case you fail to pay off the loan. Oftentimes, the secured loan comes with a lower interest rate. Examples of secured loans are home equity loans, title loans, pawnshop loans, and secured personal loans. Since there is a risk that you might lose your property in case you fail the loan, you have to make sure to keep up with payment schedules.
Meanwhile, unsecured loans will not require any collateral. Borrowers use it for different reasons like home improvement, wedding, education, and others. This is best for those who wish to pay off their high-interest credit card debt. Examples of unsecured loans are payday loans, personal loans, and credit card cash advances.
Make sure that you take unsecured loans responsibility seriously. Even if it is unsecured, it will still affect your credit score.
Where to Get a Personal Loan
In Singapore, there are two ways to get your personal loan.
First are the banks. Remember that each bank differs from another when it comes to their interest rate, repayment plan, and maximum amount that you can borrow as a personal loan. There are some requirements that you have to meet before you can get your loan which is the following:
- You must have a Singapore citizenship or permanent resident
- You must have annual earnings of more than $20,000, and be reporting those earnings with GAAP or non-GAAP
- You must possess documents that prove your personal information, salary slip, and bank statement
- Minimum age of 21 years old
Second, are the money lenders. These are considered as the alternative banks in Singapore. Money lenders are considered as a licensed group of people who sanction large or small amounts of money as a personal loan. Money lenders don’t have a fixed interest rate, unlike the banks. For some, they consider borrowing to money lenders as a smarter choice. This is due to less paperwork and availability of money instantly. And, there is no minimum annual requirement.
Determine How Much You Can Borrow
The search for the right loan starts with determining your current financial status and how much money do you need. Indeed, finding the right loan is important in staying within your means. This ensures that you can be able to pay the monthly dues on time and in full. Furthermore, you have to consider how long you will repay the dues. You must determine the payments that you can afford. Finally, take note of any additional features that you like on your loan like the ability to pay it off early.
Apply for a Smaller Loan Amount
Similar to the section above, a bad credit score can prevent you from having a large personal loan from the banks. With a poor score, it will indicate your inability to meet your loan payments. As such, if you are having problems getting your personal loan approved, you must improve your credit history first.
This is possible by applying for a smaller personal loan. If the loan is granted to you, see to it that you don’t miss any payments. You can set a reminder to alert you of the due dates of the loan. Make sure to strive to complete the payments.
With this, it will demonstrate to the financial institutions that you can keep up with the prescribed payment schedule. You might need to borrow a small loan for some time to build up your credit score. This is up to the point where the banks will feel comfortable enough for you to give the loan. Learn more about personal loan application here.
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