With a quick search engine query, you can find numerous offers of personal loans Singapore banks and financial institutions have to offer. However, finding the best personal loan can be cumbersome, especially if you have zero ideas about the requirements and possible low interest rates of loan offers you’re about to receive.
Truthfully, every borrower of personal loans in Singapore qualifies for the loan offers in the country. However, finding the best means being an exceptional and remarkable borrower yourself. If you’re a qualified borrower, you won’t need to deal with high interest rates on your personal loan. Your effective interest rate is way lower than most borrowers, especially if you’re borrowing financing for less than seven years.
In this light, it’s easy to assume there are zero difficulties in acquiring a personal loan. Unfortunately, banks and other loan providers will prioritize borrowers with better performance. Loan providers use credit scores, which are estimates of borrowers’ performance in their previous loan transactions.
Therefore, any borrower who has performed poorly with their Singapore personal loan is highly likely unqualified for personal loans if a high population of good credit borrowers exists. These good-credit borrowers receive the best loan interest rates from Singapore banks and financial institutions.
However, you can still make your credit score shine to receive the best Singapore personal loan interest rates. Here’s everything you need to know to obtain a low interest rate and qualify for the best personal loans in Singapore.
What Are Personal Loans?
Personal loans in Singapore allow borrowers to take out a loan amount that they can repay for 5-7 years. Most of these personal loans have a fixed effective interest rate for a span of a maximum of seven years with some financial institutions. However, a five-year loan term is the average extent personal loan repayments in Singapore can go.
How Does a Personal Loan Work?
All personal loans function similarly to other bank-offered loan amounts. However, a personal loan differs in terms of conditions and the amount of money a borrower can take out. With its low interest and adequate amount of money you can borrow, anyone from any level of income can take out personal loans in Singapore.
Most borrowers in Singapore view personal loans as general-purpose loans. Banks and financial institutions will not question your usage of the loans available from them. However, they’ll need to know how much annual income you have, the money you have in the bank, and your credit scores. In doing so, they can determine your loan interest rate, processing fees, and possible collateral.
Terms You Need to Know To Apply For a Personal Loan
The best loans for personal use that you can in Singapore undergoes a series of calculations. Actuaries from banks will analyze the documents and other requirements they ask of you. In turn, they’ll give you the final figures for your effective interest rate.
For most quick cash transactions, personal loan amount calculations depend solely on your income. Small, quick-cash providers, such as licensed moneylenders, can provide you money immediately. Because they provide smaller amounts, they can process cash transactions faster than banks can.
To calculate your personal loan amount and interest, you’ll need to know the financial terms that banks and other loan providers use when assessing your credentials to help you understand the calculations of your monthly payments.
However, be aware that even if you make the right calculations, you must treat it as a rough figure only. Banks and other financial institutions in Singapore are the only ones who can finalize the figures of your interest rates and processing fees. Additionally, your repayment amount for 12 months, terms and conditions, and the total amount of money you’ll receive once they approve your loan application may still be inaccurate despite your attention to detail.
The total amount of loan you are applying for and can potentially receive. How much can you borrow depends on your credit score, previous financing performance, and other deciding factors the bank will use.
Loan Term or Tenor
A personal loan term is a total time you have until you can pay the full amount of the personal loan inclusive of its interest rates. The best loans don’t always have the lengthiest payment periods, but it’s one of the best indicators for good loans.
The usual loan term for personal loans is a payment period of 5-7 years. During this time, borrowers will pay their low interest rates for a limited amount of time. For example, some banks can provide borrowers with loans they can pay for seven years, but with the first year having zero interest.
Borrowers can consider an excellent personal loan term to extend the longest while having low interest rates for the longest time. For example, a loan that only has a 1.3% flat interest rate yearly for five years is better than a 0.33% starting interest rate personal loan that you need to pay for the same length of the term.
Estimated Monthly Payment
Actuaries working in financial institutions consider your income as the primary basis of your possible estimated monthly payment. In many cases, lenders have asked borrowers about their regular pay, any existing debts, and repayments, and other commitments involving a considerable sum of money to calculate their final monthly payment. Most of the time, the annual proof is enough for banks to have a reasonable calculation of monthly payments.
If you’re curious about your possible regular personal loan repayments, you can check the complete loan terms of your chosen personal loans. Next, you’ll need to divide the total loan amount per month. Lastly, consider any annual percentage rate (APR) increases your prospective personal loan might have. In doing so, you can calculate your estimated monthly payment with a rough result close to the final amount of money you’ll receive.
Total Cash Payment By End of Term
Your engagement with your bank or financial institution ends once you’ve finished your total cash payment. While lenders expect you to ultimately pay your cash loan by the agreed end date, you can actually end your term fast by paying higher sums in advance. One of the best ways some borrowers achieve this is by leaving their processing fee costs by the end of the term. Truthfully, you won’t need to calculate the total cash payment by the end of the term. The bank or lender will provide this to you.
The amount of money you’ve borrowed without adding the total interest it has incurred throughout your loan tenor. Some personal loans allow you to pay for the principal and refinance or pay your interest total later.
Flat Interest Rate
For individuals with good credit scores and proven income sources, a flat interest rate is easy. You can say they have the most privilege when it comes to getting the best loan products in Singapore. However, licensed moneylenders in the country can provide you the same flat interest rate inclusive of your processing fee. One of its most significant advantages is you won’t need a good credit score to work well with licensed moneylenders in Singapore.
Unsecured Personal Loans
The average personal loan products offered in Singapore’s financial market. This financing requires no collateral, provides low interest, but has a shorter than average loan tenor and available loan amounts.
How Does One Qualify For a Personal Loan?
Excellent Credit Scores
Banks and financial institutions greatly use credit scores as a deciding factor in approving all personal financing applications. If you have poor credit scores, banks might limit your options or deprioritize your financing application.
Good Credit History
In line with your credit scores, you must have performed well with you previous financial commitments. Banks can source your credit history and assess your fiscal conduct, which helps them prioritize your application if you qualify.
Provide All The Needed Documentation
For most personal loan applications, you’ll need to pass documentation that will establish the following:
- You are at least 18 years old (Birth Certificate, Identity Card, Driver’s License, etc.)
- Minimum Salary of S$1,500 and S$3,000 monthly for Singaporeans and foreigners respectively (Payslips, Employment Letter of Offer, etc.)
The Personal Loan Application Process
Calculating Your Personal Loan
Using all the terms above, you can decide on the final loan amount you can borrow by fully understanding your immediate need for financing. It’s easy when you’re borrowing to purchase items: the total item price is your loan amount. However, it can be difficult to make a decision if you haven’t calculated your debt-to-income ratio. If your final ratio has your potential debt payments claiming more than half of your salary, it’s better to take out a smaller personal loan for better chances of approval.
Apply for Prequalification
Singapore Banks have online access features ready for applicants. You can fill out a form and provide basic information the form asks, which is usually your birthday, occupation, and the loan amount you want to borrow. Most prequalification facilities provide you a rough amount of money you can borrow using the data you enter. It may or may not be close to your ideal borrowable amount.
You can continue with your digital application if you agree with the total loanable amount presented to you. Next, the bank will ask you for documents that support your personal information.
Compare Loan Offers
You can use Loan Advisor, CashMart, and other Singapore-oriented loan comparison websites to find the perfect amounts and rates for your personal loan. If you’re unsatisfied with your prequalifying results, you can try with other financial institutions until you find the perfect financing.
It’s easy to decide and sign up for just any kind of financing. However, once you’re committed, you can’t turn back unless you’ve finished paying for your existing personal loan. Perform due diligence and research everything until you’ve finally found the perfect financing for you.
Why Do You Need Personal Loans?
Taking out a personal loan is best for addressing financial emergencies as long as you have a stable annual income. Unlike credit cards, they have dependable fixed rates, making them easy to calculate and manage for most Singapore borrowers. You can find yourself in the situations we’ve listed below, you can find financial reprieve by taking out financing.
Refinancing Student Loans
Parents who find themselves short and used their savings to fund their immediate need can take out quick financing from banks and moneylenders when the new school year draws near. In doing so, they can use friendly payment options available from providers of loans in Singapore. As long as they can establish, they have a stable annual income, they won’t encounter any problems throughout the financing process.
Improving Your Credit Scores
A small bank or lender loan with a fixed 5 p interest rate is good enough to help borrowers with bad credit lift their poor credit scores due to previously bad financial management. However, Singapore borrowers need to establish that they have a stable source of money, even when working with reliable moneylenders. Without any source of money, it’s challenging to restore credit scores, and take out financing.
Consolidating Credit Card Debt
A credit card is a double-edged sword in Singapore. It’s easy to keep swiping and worrying about repayments at a later time. In doing so, some Singaporeans end up with huge loans, which are challenging to address. A quick cash loan from banks or moneylenders can help consolidate credit card debt. Most cards have higher interests than a small-amount loan. Furthermore, they have less processing fee too.
Upgrading Your Property
If you’re re-selling your condominium or traditional home in Singapore, you can use small financing to fund your renovation efforts. The amount is often enough to hire a contractor and purchase enough materials to address specific issues your property has. Truthfully, you’ll want to have bigger financing if you plan to improve your condominium’s market value.
Get a Quick Personal Loan From Dependable SG Licensed Moneylenders
However, not all lenders handle loans exceptionally well and fast. Bugis Credit is a licensed Singapore moneylender that can provide you with great financial reprieve — and you won’t need good credit to pass our criteria. Contact us today or visit our website to learn more about everything that we can achieve with you.