If you need money to make big purchases or pay outstanding bills, applying for a personal loan is a great option. Legitimate and safe Personal Loans can be acquired from Banks and Licensed Moneylenders. While both may be different when it comes to requirements, process, and eligibility criteria, you can further assess which institution works best for your unique financial situation.
However, before you do that, it’s important to note that many factors can affect your chances of getting approved for a loan and determine which personal loan you should apply for.
Before you apply for a personal loan, here are 5 things that you should consider:
Before you choose a personal loan, you need to know how much you actually need. With licensed moneylenders you can borrow up to 6 times your monthly salary, while banks can lend you up to 10 times.
If the amount of money you need is around those figures, getting a personal loan would help your financial situation. However, if you only need a smaller amount, it might be better to borrow from a friend instead of going through the hassle of applying for a loan with banks.
But for a safer and legitimate short-term personal loan, licensed moneylenders can offer a fast loan with a competitive interest rate of 1-4%.
Your Credit Score
Your credit score will help the bank determine if they should approve your loan. It’s an indicator of your ability to repay your debt obligations. Banks use it to assess the risk they will be taking when they lend to a specific borrower.
Your credit score contains details regarding your payment history on loans, borrowing records, and information about the number of bank accounts that you own.
The higher your credit score is, the higher your chances of approval. A low credit score can be very disadvantageous for a borrower. It would make it harder to get a loan especially when taking a loan from the bank.
While your credit score is crucial when borrowing, licensed moneylenders are more lenient with the number provided that you meet the eligibility criteria and that terms are agreeable for both parties.
Total Cost Of The Loan
Although it may be tempting just to enjoy the money from the loan now and just worry about the amount you have to pay back later, you also need to calculate the total cost of the loan first.
When computing, you need to include interest rates and all other administrative, processing, and late fees. The interest rates will greatly increase your overall repayment amount. Ensure that you have a clear understanding of how much you would have to pay in the future. You can double-check with your loan officer to be sure.
Both banks and licensed moneylenders provide a complete and detailed payment plan including the loan tenure, interest rate, schedule of payments, and other fees.
Above all, you should be eligible to apply for a loan in the first place. Banks and other money lending institutions will check your age and income. In Singapore, they require you to be at least 21 years old to qualify for a loan from a bank. Most banks require a minimum annual income of $20,000, depending on the type of bank personal loan packages.
On the other hand, moneylenders require you to be at least 18 year of age to be able to apply for a loan.
If you are currently unemployed or earning below the minimum amount required, it will be very difficult for you to get a bank loan. However, most licensed moneylenders provide financial solutions even for borrowers with lower income. You only need to have a minimum income of S$1,500. You can view the complete requirements and criteria here.
Depending on your lender, you may be able to choose to make your monthly payments as low as possible by paying back your loan over a long period. But if you want to be done with your obligation as soon as possible, you can also ask for the loan repayment plan with the highest monthly payment. Note that a longer repayment term usually comes with higher interest costs.
Personal loans can be a quick solution to your financial problems. You might need extra cash to pay for medical bills or tuition fees, buy a house or a car, or deal with other emergencies.
Whatever your reason may be for needing money, it’s important to understand the factors that can determine if you will get approved for a loan or if a personal loan is an option for you.
Visit Bugis Credit, among the best licenced moneylenders in Singapore, for their affordable loans!
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