The general rule in applying for the type of loans in Singapore is if you need to choose between applying for a bank loan and borrowing money from a moneylender, it is for the best that you go with the bank. It is a known fact that in Singapore today you have three options by which you can procure financial assistance and these are applying for a loan from banks; from large financial institutions and the more common moneylenders.
Moneylenders should be your last option. These types of lenders usually provide only small loans and payday loan. As much as possible, try and stay away from moneylender (especially from unlicensed ones) because although most of them are allowed to provide loans, they may still put you into more financial problems because of the following reasons.
- The first moneylender is a loan company that usually charges very high-interest rates. Normal interest rates for loans charged by banks ranges only from 6 to 9% per annum while the interest rate charged by moneylenders is a whopping 48% per year. As a matter of policy and because of laws covering loan transactions in Singapore, moneylenders do charge legal rates, interest but what is questionable are the hidden terms and conditions that make the interest rates much higher than they seem. For instance, the re-contracting fees that moneylender charges their clients are fees that allow them to repeatedly charge a specific amount for renewing the loan.
- Second, loan contract provided by moneylenders are full of hidden charges. Administration, late payment, and new transaction fees are just some of the charges incurred by the borrower.
- Third, some moneylenders use debt collection agencies to collect their outstanding loans. Big banks and other large financial companies are content to deal with recalcitrant borrowers by bringing them to court or by just denying them the future loan. Some moneylenders in Singapore use debt collection agents that usually embarrasses the borrowers by continually harassing them.
- Fourth, moneylender’s repayment schemes are usually very hard to comply with and most moneylenders don’t have payment outlet that makes it hard for the borrower to pay them.
- Lastly, unlike credit cards or standard bank loan, borrowers don’t get additional benefits from getting a loan from moneylenders.
There are various types of loans available in the Singaporean financial market today. This various type of loans is considered to be a big help in developing the country’s economy and raising the living conditions of many residents here. There are two general types in which loans in Singapore are categorized and these are the unsecured and secured loans.
Secured loans are those types of financial help where the borrower need to secure or cover the loan with some kind of valuable assets, such as a car, property or any other personal asset whose value is more or equal to the value of the total amount of money provided by the lender. The interest rate for this kind loan is usually reasonable and repayment terms are usually longer.
Unsecured loans, on the other hand, are exactly the opposite of secured ones where the borrower need not secure the loan with some form of assets. The interest rate for this type is a lot higher and repayment of the loan has shorter terms.
There are a variety of loan companies where one can get financial help in Singapore, and many of them provide both secured and unsecured financial assistance to loan applicants. There are conventional and conservative financial institutions like banks and financing companies. There are also various licensed lenders found around Singapore that provide short and long-term small loans and other types of loans to various individuals here. All of them have their own loan policies and loan amount ceiling; interest rates and repayment terms. Under the secured and unsecured loans are still a variety of loans that an individual in Singapore can avail of and they include the following:
- Personal loan-one of the most popular loan in Singapore. It has no specific use, but many take out this kind of a loan to purchase a variety of personal things. The loan can go as much as 4 months of your salary. The interest rate is fixed and repayment options are usually short. Personal loans are usually available in banks and other licensed lenders.
- Payday loan-this is usually a small loan, but with high-interest rates and needs to be repaid within the next 30 days or your by the time you receive your next paycheck. It’s easy to apply and qualify for. There is no credit check and the only document you need to submit is your proof of employment or business income. The loan is available in almost all parts of Singapore.
- Foreigner loans-basically for foreigners who have legal work or employment permit in Singapore. This type of loan is available mostly in banks.
- Business loans-these are funds provided to various businesses by different organizations, financial institution, private lenders and banks.
Applying for any type of loans can be a very tedious task for most people, especially if it is their first time to file for one. But it is a fact that there will come a time when an individual’s economic needs will bring them to apply for some form of financial assistance like a bank loan to cover unexpected miscellaneous expenses. They will, however, find it difficult especially if they have been financially independent for so long that they won’t know the first thing about applying for a loan either from a Loan Company, banks or other financial lending companies.
The first thing to understand is that as a beginner, banks will be focusing on some key areas of your economic personality and this will mainly include your fixed assets, work and/or business income and your liquid assets that are currently available. It is important that you are ready with all the documentation that will support all of these areas.
However, bank’s requirements are much more stringent so here are some financial tips that may be helpful to facilitate and hasten the bank approval for the loan.
- First after selecting the bank or financial institution that you would want to apply your loan to, you need to study and see beforehand your preferred bank loan packages and if possible compare it with other packages offered by other banks. You need to know the type of loan to avail, repayment terms that suit you, and your estimated timeline in paying off the loan.
- Second, when you finally decide on the loan package, talk directly with the bank and immediately find out what their requirements are. Remember that although banks have similar functions, their policies and requirements differ and knowing this ahead will give you enough time to prepare all that is needed by the bank.
- Third, always know your limitations. For any kind of loan, you should always be aware of your credit history, score, and rating. Remember that having a good and preferably an excellent credit rating will go a long way in having your loan approved. But if this is your first time to apply for a loan, there may be extra documents that the bank may require so you also must be ready for this. It is also to your advantage if you can already have somebody who will stand as a co-maker for your loan in the event that the bank will require you to have one.
- Finally, based on the requirements, documentations and other information given to you by the bank it would be wise to create a checklist for all of this. Remember that incomplete documentation may cause your loan to be denied.
In Singapore, having a good credit rating is very important, especially if you want to make your lifestyle more comfortable and easy. If you have just joined the rat race that is called life, then there is a need for you to understand the importance of knowing the ins and outs of applying for any type of loans in Singapore. For most Singaporeans, loans are very important and at times a type of necessity. Loans enable people to accomplish things that may in one way or another require large sums of cash. This includes property purchases, educational payments, home renovation, car purchases and other things that heavily influence an individual’s day to day activities. However, applying and getting a loan is no easy task, so if you have just joined the rat race of life and a newbie in the world of borrowing money, here are some lending tips for beginners like yourself.
First of all you need to understand that creditors, banking institutions and other types of Loan Company requires you to comply with specific conditions before they would even think of looking at your loan application and these conditions are first, that you should have enough assets which can be used as collaterals in the event that you cannot make good on your loan. More often than not, banks and other conventional financial institutions are the ones that are quite strict relative to this condition.
Second, they need to be reassured that you have a steady flow of income, either from your employment or businesses that you have put up. More importantly, the ratio between your income and expenses should at least be a 60 to 40 ratio. This should assure the lending company that you will have enough surpluses to pay off the loan or at least have enough to pay for the monthly amortization if the loan is to be paid on installment basis.
Finally, if you are a businessman, you should be able to prove that your trade is making money and your track record of profit making is unquestionable. In case you find it difficult to get business loans or any other kind of loans due to being a newcomer in the business realm you can resolve the problem by asking a friend or relative to stand as a co-maker for the loan. You must understand that as a first timer in the applying for a loan, you must expect that you will have a hard time getting one.
The fast development and growth of the economy in Singapore have given her citizens and foreigners alike to further experience and relish the comforts of life. Unemployment and poverty are now hardly an issue here because almost all Singaporeans are in one way or another earning a reasonable amount of income to feed himself and his family. One way to establish the validity of this theory is to note of the number of banks and lending companies that now flourishes in the city.
Most Singaporeans today indulges in borrowing cash from any loan company in Singapore and very few of them are not able to cope and manage their loan obligations with the lending company. As a matter of fact, the percentage of this kind of borrowers is almost negligible. A very high percentage of those who have loan obligations are known to be able to manage and comply with their loan repayment terms. This makes Singaporean residents quite good at keeping their credit rating or score at a high level, making them one of the best loan payers in Asia.
However, even if individuals and families are able to live well and loan approval is not difficult to achieve, it is necessary for the loan applicant to not just select the first lending company he sees and immediately file a loan application. Even if the country is quite strict in its laws regarding loan transactions, it still would be prudent for the borrower to carefully select the loan company to which he would want to apply any type of loans with. Like in any other countries, Singapore has her share of having bad money lenders going around victimizing individuals with their false promises of a good and fair loan deals.
So, the first order of the day is that if you intend to apply for a mortgage, car and/or business loans, make sure you initially approach local banks and other conventional financial institutions to provide you with a loan. Legal and licensed lending companies are the best lending financial institutions to go if your intention is just to apply for small loans or even for a large personal loan. But you must remember to check them out first prior to closing a deal with them. The things to look out for are the institution’s registration number which should be valid and up to date; their reputation should be solid and preferably untarnished; their interest rates are within the legal rules and regulations of loan transaction laws and as much as possible offer a very reasonable repayment terms.