People take a loan when they are in dire need of some extra money. The need for the loan can vary from person to person. Someone may need a loan due to medical reasons. Some may have a wedding. Some people take loans to buy a house or a car. Some need it for education purposes.
People take loans generally from a bank or legal money lenders. This article can guide you on how to get a loan in Singapore.
Taking loans from a bank
It is not always feasible to borrow money from a friend or relatives. Hence people mostly prefer to take a loan from the bank. The banks provide different types of loans for varying purposes. However, there is a problem with taking a loan from the bank. The bank places some criteria. Only after fulfilment of these criteria, the bank gives the loan. They have a particular age limit between 25 to 65. A person below or above the mentioned age limit does not get a loan from the bank. They also see your annual income before giving the loans.
Get a loan in Singapore!
The most untroubled loan to get from a bank is a personal loan. It helps you to get the cash instantly in Singapore within a week of your application for the loan. Personal loans are unsecured, but it’s an easy loan. The interest rate remains fixed. Therefore it is more secured to get this type of loan for an emergency.
But to get the loan, you need to have an excellent credit history. The sum of money that you get is small. The interest rate remains high. However, getting a personal loan from Singapore banks and Singapore money lenders is also very easy.
Things you should consider before taking a loan
Before you take any loan from the bank, you need to consider the following things-
- Rate of interest of the loan- First, you need to check the interest rates that the bank is providing for your loan. If you are taking any personal loan in Singapore, note that the interest rate is not more than 4% per month. However, not all banks provide the same interest rates. For instance, one bank in Singapore gives a rate of interest between 3.7% to 3.8%. While another gives an interest rate from 3.99% or 3.88% interest rates. While some other bank provides an interest rate of 5.42%. In this way, there are other Banks with different interest rates as well. Therefore it is advisable to check all the bank’s interest rates before taking a loan.
- Time of the loan- Secondly, the period for which the bank is giving you the loan. Sometimes you may need to pay extra money if you give back the loan before time. You can also fail to repay the loan within time due to some unavoidable circumstances. In such cases, you also need to pay a fine. In Singapore, if you fail to give back the money within the time, you need to pay a late fee. If the loan is a personal loan, this fee does not exceed S$60 every month and 4% for late interest every month. The time that the Singapore bank gives is at least one year. Other licensed money lenders provide a much shorter and more flexible period.
- Your economic condition- Thirdly, your economic condition. In the end, you need to pay back the money that you take as a loan to the bank. When the time and with interest the sum of money that you need to pay back increases. In Singapore, the banks offer the loan to people whose annual income is SGD 30,000. If a person’s income is less than SGD 30,000- the bank does give the loan but at higher interests.
- Check before taking a loan- Most of the time, people take loans from banks. But sometimes, people take loans from money lenders. The reason for this is that many times they give more interest rates than the Banks. If you consider taking loans from any other moneylender, you should be careful. You should always check whether they have the legal rights to give you the loans.
Different loans for varying purpose
Before taking a loan, you should know that there are different kinds of loans for varying purposes.
There are personal loans, business loans, education/ students loans, equity loans, mortgages etc. These loans are for different purposes and provisions.
- Personal loans- It is of two types: secured loans, where the collateral is compulsory. And unsecured loans, where the collateral is not necessary.
- Business loans- There are different types of business loans available-
- Term loans
- Short-term loans
- Equipment financing
- Lines of credit
- Small business administration loans.
- Student’s loans- Helps students to study abroad and fulfil their dreams. In Singapore, students can take personal loans for their education. It helps in all the expenses related to education like tuitions and textbooks. The interest rates for education purpose that the bank gives are also low 5%-6%. Hence 30-50% lower than what they usually charge for a personal loan.
- Mortgages- There are two types: conventional mortgages and government mortgages
- Equity loans- These loans are of three types:
- Home equity loans
- Home equity lines of credit
- Home improvement equity loans.
To sum up-
Therefore a loan is an amount of money that one takes in the hour of need. It has interest rates and a particular period. After the time gets over, you need to pay back the money from whom you took the money.
In Singapore, the process of getting a loan from banks and money lenders is easy. Check all the things required to take a loan, like your loan eligibility, interest rates, monthly instalments. You also need to provide some documents like address proof, ID proof, income proof to the bank. The bank checks everything. If they find all the legal papers correct, your loan will be approved.