You might be having some questions about loans, such as “Which is the best loan option?” and “Is it a good idea?” One of the best options is a personal loan, and we are going to tell you why in this comprehensive guide.
Have you been thinking of how to move to the next level, but things are either sluggish or stalled completely? Well, a helping hand might be all that you need. Whether it is boosting your business, going for a holiday, renovating your home, or buying a new car, a personal loan might be one of the best options.
Keep reading to learn more about what they are, associated benefits, and how to apply for personal loans in Singapore.
*This article is done in collaboration with Lendela, together we attempt to help parents better understand finance for the family.
Personal Loans: What are they?
A personal loan is a type of financing provided by a lender, allowing you to use the money for different personal purposes. This implies that unlike car or renovation loans, which are tied to specific uses, you have a free hand on how to utilise a personal loan.
Personal loans are provided as a lump sum, which is deposited on your checking account after approval. Then, you are required to repay the loan plus interest. See – you are able to make a major purchase or roll multiple expensive debts into one and then repay the personal loan at your own pace.
You might also find personal loans going by the name consumer loans. One important thing you need to know about personal loans is that they are not backed by collateral. Instead, lenders check your credit score to assess your creditworthiness and use the info to fix the loan's interest rate.
Lenders Offering Personal Loans in Singapore
Here are the five main personal loan providers in Singapore that you can use:
- Banks: Almost all banks in Singapore offer their clients personal loans. Once you apply for a personal loan, the bank of choice will check a number of things, such as creditworthiness and repayment ability, before approving or declining.
- Traditional Moneylenders: These are financial organisations that offer their customers credit cards, personal loans, and revolving credits. In most cases, traditional money lenders have lower interests compared to banks.
- Virtual Banks: These are financial institutions that work like the traditional moneylenders but run without physical presence. Although they are relatively new, virtual banks are becoming very attractive to borrowers.
- Online Moneylenders: The primary goal of online moneylenders is to use the internet and advances in technology to make access to financial services, such as personal loans, easy. Often, online money lenders creatively attach unique benefits, such as zero fees, to make them more attractive than conventional banks.
Special Benefits of Taking Personal Loans in Singapore
When you take a personal loan in Singapore, the main advantage is that there are no restrictions on how to use the funds. This means that once the money hits your account, you can go ahead and buy household furniture, machinery or pay for a holiday, among other purposes. Other benefits of using personal loans Singapore include:
- Because the loan does not need collateral, there is no danger of getting your assets sold if you default.
- Documentation for a personal loan in Singapore is pretty easy. Take the example of using Lendela. In this case, you will only need a few things, such as proof of identity, bank statements for the last 3-6 months, and recent salary slips.
- Because the repayment is made in monthly instalments, the burden on your finances is reduced. This means that there will be limited interruptions in your lifestyle because only a small portion of the salary/ income goes to repay the loan.
- Most personal loans come with interest rates lower than those of credit card loans. If your credit score is low, the interest rates will be equally low.
- Personal loans are processed within a very short time.
- Personal loans come in different types to suit your needs. Most lending institutions customise the loans, and it is possible to get personal loans for investors, doctors, engineers, or other professionals.
Things to Think about when Applying for a Personal Loan
Once you decide to apply for a personal loan, it is important to appreciate it entails committing to monthly repayments until it is cleared. So, it is crucial to think about the effect it will have on your finances and lifestyle. Here are the things you need to think about:
- Loan repayment interest
- Your monthly income
- Repayment capacity
- Personal credit score
- The impact of the loan on your credit score
- Repayment period
- Total amount payable
- Why do you need the money?
How to Apply for a Personal Loan?
When applying for a personal loan, the approval will largely depend on the information you provide. So, make sure that the details you are providing are correct, and go through the following steps:
- Assess Your Loan Options
It is always advisable to go for the personal loan with the lowest interest rates, but how can you be sure that you got a good loan deal if you don’t apply to multiple lenders, and then compare the offers? Lendela helps you with comprehensive comparison of different lenders and their personalised loan offers based on your situation.
- Understand Your Eligibility
One convenient thing about personal loans is that most lenders go by the same criteria when approving applications. Here are the main requirements:
- A decent or good credit score
- Employment/stable source of income
- You need to be Singaporean or a Permanent Resident
- You need to be 21-61 years old
- Submit the Loan Application
This is one of the most important stages of the loan application, and it involves filling out the application form and supplying the required documents. Note that the loan application process can vary from one lender to another. You will also be required to visit the selected lender's branch for final approval and disbursement of your funds.
As mentioned above, you can apply for a personal loan in Singapore by using a service like Lendela, and receive personalised offers from multiple lenders. With Lendela’s assistance, you compare the terms of your loan options, select the loan that suits you the best, upload the necessary documents, and schedule an appointment for disbursement at the lenders office. All this is done online, meaning that you don’t have to leave your home to find the best possible loan.
- Wait for Loan Approval
When your loan has reached final approval, make sure to read all the details and understand them well. Particularly, you should check the interest rates, repayment period and reflect on how it will impact your finances. If you are unsure about something, make sure to ask for clarifications before signing the loan.
- The Loan is Disbursed
Once you have signed the loan agreement at the lender’s office, you will receive the cash on the spot. Now, it is time to use the money as you had planned.
Unsecured personal loans are some of the highly demanded forms of financing because people are free to use them as they want. Why go for more expensive credit, such as credit cards, when you can get a personal loan in Singapore?
If you are looking for a simple personal loan comparison option in Singapore, please check out Lendela. Your application is 100% free of charge and doesn’t bind you to any of the offers you receive.