Personal loans are among the most popular types of loans available. This is the type of loan that you will need to take for your own reasons. Whether it is a sudden need of funds for travelling or if you are looking for some cash injection into your business, personal loans are your best options. Banks and financial institutions offer such packages to allow you to maneuver your finances better. Most people apply for such loans for reasons such as renovation, vacation or to clear a current debt.
Always maintain your good credit rating if you are keen in Personal loan
NO ONE WILL GIVE YOU A LOAN!! In the event that you have bad credit standings. In fact, you will find it harder than anything in the world to borrow any money from licensed money lenders or banks if you have defaulted any payments in the past. But does that mean you are DOOMED for life? That you will no longer be able to get a loan in Singapore, EVER?
Know your credit score, then master it!
At this point, it is assumed that you already have a bad credit history. It can be a minor one where you might have made late payments occasionally or a major one where you have already missed a few payments and are going from month to month making up the lost payments. Whatever it is, before you can get any loan, the bank (or any financial institution) will scan your credit history. Your credit report would provide all the information the lender needs. A black mark can be in your credit report and it can come from the smallest of reasons, like paying late for your credit card. It is then up to the officer of the bank to judge if lending you the money is a big or small risk. But then again, a negative impression will always hinge above your standings and it will always drag you down when you want to apply for a loan. So, is there a way around it? We teach you how!
Find avenues to discuss and complete the process
At the end of the day, the approval (or rejection) for your loan application comes from the judgment of the officer. Once your credit report is extracted, the person looking into your report will have to make a decision. If you are able to speak to someone (like a loan officer or a bank teller) and explain why you have a bad credit history, there could be a reprise. This means that if the person in charge empathizes and understands your reasoning, then your loan might be approved. After all, your late credit card payment could be due to unforeseen circumstances. You just need to explain it in person. One of the more effective ways is to get your loan from a registered money lender. This is where you get the chance to sit down and talk before proceeding.
Secured Loans – Guaranteeing a Guarantee
Your bad credit rating is one thing, but if you have some form to guarantee your repayment, perhaps the lender might be more receptive. After all, borrowing you the money from money lenders is all about knowing you are able to repay back. The lender will be more than happy to entertain you if you have something to back up your application. For instance, if you have valuable jewelry, title deeds, share certificates or more commonly, properties. When your application has the backing of some form of asset (which value possibly more or equal to the amount you are borrowing from money lender), then your application might just get through. As the name implies, it is about giving some form of security.
Surety Loan – Get the help of Friends or Families
A surety loan will be your next option if you do not have anything to guarantee. Instead, you can get someone to be your guarantor. A friend or a family member could guarantee you that you can repay the loan. This person (or party) would be someone with good (or excellent) credit history. In other words, if you fail to repay the loan, the guarantor will have to bear the commitment. It is never easy to find someone to be your guarantor even if they are your family member. In most cases, they need to know what they are signing for. If the amount is not too much, it should be fine but if you are borrowing a large amount of money from money lender or bank, it might be hard to convince them to become your guarantor.
Bad Credit History does not mean an ultimate end!
At the end of the day, having a bad credit history does not mean it is the end of the road for you. Besides, no one chooses to have a negative impression on the records. There are situations when the bank would listen and discuss with you but they are commonly bound by policies. Many moneylenders, however, are ready to help and have a conversation with you. You just need to let them understand your situation and to convince them that you are able to repay the loan.
More Criteria in getting personal loan in Singapore
Personal loans in Singapore can be easily accessed via many channels. You can actually apply for it through most of the major banks in Singapore or you can talk to registered moneylenders to get a short-term loan as well. When it comes to such loans, you need to take note of several factors.
- amount borrowed
- repayment tenure
- eligibility to borrow
Purpose for borrowing
Anyone with a stable income would be able to apply for a personal loan or any licensed money lender. However, you would know for a fact that if your application is successful, you will effectively enter into a multiple-year commitment contract with the bank. In other words, you need to payback a certain amount monthly for a few years. Hence, you must decide if you really need to borrow from the bank. The personal loan is an unsecured installment loan and you can use it for any reason you like. This differs quite significantly as compared to other types of more specialized loans like education and business.
As such, once your application has been approved and the funds disbursed, you are free to use it anyway you like as long as you pay back according the agreed schedule. Hence, be it a family emergency or a shopping spree in Orchard, it is entirely your call.
While each bank has its own set of terms and conditions, you will need to fulfill certain criteria in order to apply for a personal loan. Basically, each bank will be more than happy to let you apply as long as you are eligible. Generally, to apply for a personal loan, you should be:
- A Singapore citizen or a Permanent Resident
- Age not younger than 21 and not older than 65
- For local Singaporeans, your income must be more than SGD20,000 per year. This is applicable for PRs as well
- For foreigners and expatriates, your annual income must not be less than SGD40,000
In most cases, you are free to decide on how much you want to borrow from any licensed money lender, the bank or financial institution. That gives you a figure or amount to work with before you enter into any form of negotiations. Fundamentally, each individual is allowed to apply between 2 and 6 times of your own monthly income. In other words, if you earn SGD2,000 per month, then, you can apply between SGD4,000 and SGD12,000 for the loan. The cap here is at SGD200,000.
Very much like any other forms of loans offered by the banks and financial institutions, there is a loan tenure that you must decide. Once you have confirmed on the amount to borrow without having to disclose any further information, then it is where you need to decide on how long you want to take in repaying the amount. For most banks, this could range between 1 and 7 years which means you can drag the payment to a longer time.
This is where you must be extremely careful because the banks are very quick and efficient when it comes to collecting debts. The loan tenure is decided by the bank in most situations. Anyone who has borrowed from the bank will be aware that these firms would want to keep their customers for the longest possible time as that is where more interests get charged and then imposed onto the principal amount.
In most cases, there is a nominal processing or administrative fees involved. Some banks have higher rates as compared to others. The rule of thumb is that they should not charge more than 3% of the approved loan amount when it comes to these fees. There will be some ‘hidden’ costs which should be communicated to the customer before he decides on anything.
Unlike other forms of loans where they have floating and fixed rates, personal loans are slightly different. Singapore banks offers between 6 and 8% per year depending on the applicant’s choice. On top of that, the tenure involved could be between 1 and 7 years.
Below are some of the personal loans offered by major banks across Singapore.
The loan application process
In other words, what documents are needed for a personal loan? When you are interested to apply for a personal loan, you must be very sure of what documents is required. This is to help with verification and validation purposes. For the applicant, the documents that need to be submitted include
- Photocopy of NRIC for both sides
- the latest e-statement will be required from a full-time or part-time salaried employee.
- alternatively, the CPF contribution history statement for the last 12 months can be used to apply for the loan
- latest Income Tax Notice of Assessment
On the other hand, if you are a self-employed individual, then you must produce your Income Tax Notice of Assessment for the last 2 years.
POSB/ DBS Personal Loan
The POSB/DBS Personal Loan is among the most convenient and quickest when it comes to the process. You can now enjoy instant cash once your application is approved. This loan is specially catered for credit card and Cashline customers of the bank. Apply up to 10 times your monthly salary and enjoy a flexible and affordable repayment scheme. On top of that, get competitive rates of less than 8% per annum of up to 5 years.
Standard Chartered Bank Loan
The Standard Chartered CashOne is known for its no-frills personal loan package. It is actually meant for customers who are in the high income group. This is a loan that offers applicants with a huge loan. However, it has got one of the highest interest rate in the market. The minimum financing amount is SGD1,000 where you can borrow up to 4 times your monthly salary. There is a ceiling amount which is at SGD250,000. You can enjoy a repayment term between 1 and 5 years with a SGD199 annual fee payable for the first year only. Application process is quite fast and once approved, you should get your money on the next day. To be eligible, you should have a minimum gross salary of SGD1,667 per month.
HSBC Personal Loan
This is the one package known for being the best large, long-term personal loan and is perfect for anyone needing a loan which is huge and has a long-term repayment schedule. It is the only one in the market that offers up to 7 years. This is because many other banks usually offer up to 5 years only. interest rates from this bank is between 7 and 9% at the moment. If needed, you can borrow up to 8 times your monthly income. What makes the HSBC Personal Loan so interesting is that you will know if your application is approved within 1 minute of application.
Citibank Personal Loan
Citibank offers the Citibank Ready Credit Paylite which is a great small and short-term personal loan. This is good for entrepreneurs and startup businesses who need some form of cash to help them stay afloat in the first few months of their operations. This loan ranges between 1 and 3 years with an interest rate of around 8.5%. You must be a citizen or Permanent Resident of Singapore to be eligible for this loan. The minimum annual income is SGD30,000 and there is no processing fees involved. Besides that, you should be between 21 and 65 years of age and if you decide to settle your outstanding earlier, there will be a 3% penalty of the principal amount.
This is an interesting product which is perfect for short-term personal line of credit applicants. It has got a higher interest rate as compared to other local banks in Singapore. You will surely enjoy and appreciate its fixed monthly installments of up to 60 months. Application for this loan is very convenient and fast with interest rate as low as 6% per annum.
Maybank Home Loan
Maybank Home Loans are categorized depending on which type of property you intend to buy. The Maybank Home Loan is available if you intend to buy either a HDB Flat or a private property in Singapore. This is available for both new and current customers. On top of that, you can also apply to refinance your current property to free up some cash if you need them for other purposes.
DBS FHR Housing Loan
The DBS FHR (Fixed Housing Loan) is among the lower offerings in the market among the banks in Singapore. Unlike other types of loans, you can enjoy a more stable and fixed loan interest. The rate for this loan is about FHR + 1.45% for the first few years. Besides that, you can enjoy legal fees subsidy from DBS for this package. You can borrow a minimum amount of SGD100,000 with a 2-year lock-in period applicable. This loan package is offered to both new and refinancing customers. However, the bank can change its FHR at its discretion.
BOC Debt Consolidation Plan (DCP)
The BOC Debt Consolidation Plan is a loan package that helps you to save on your monthly commitments. With a low interest rate package, this is where you can now consolidate all your debts by paying back one single source. Typically, this is a debt refinancing package where you bring together all your unsecured loans like your personal loans and credit cards and let Bank of China pay them back for you. You will get a complimentary credit card for this and enjoy a fixed repayment schedule of up to 10 years. You must have an annual income of at least SGD30,000 and be a Singapore citizen or Permanent Resident.
The CIMB Cashlite is typically a personal loan package. The interest rate is about 4.5% per annum where you can borrow up to 5 years. To be eligible for this loan, you must be either a Singapore citizen or Permanent Resident with a minimum annual income of SGD2,500. The application process takes slightly longer than other banks where it will require up to 10 days.
UOB Home Loan
If you plan to buy your own property, UOB offers both types of packages which are either fixed or floating rates respectively. For the floating rate package, you will have to consider its 2-years lock-in period. On the other hand, you can consider the SIBOR Package 2 which comes with only a 1-year lock-in period. This is the package that gives you lower cumulative rates.
With the OCBC ExtraCash personal loan, you can borrow up to 6 times your monthly gross salary. You need to be at least 21 years of age and has minimum monthly gross salary of SGD1,667. There is a processing fee for this application depending on the amount you are borrowing. This process usually take about 7 working days. Take note that the OCBC ExtraCash has a 3% penalty for early settlement of the outstanding principal amount.