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Dos and Don’ts for Getting a Personal Loan in Singapore

by • January 19, 2015 • Personal LoanComments (0)3292

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Want to materialize your desire to make a trip to Europe in coming vacations? Don’t let that typical ‘Low on cash’ problem keep you from living your life to the max. They say that there is a solution to every problem and in Singapore, the solution to money problem is named as Personal Loan. Also termed as un-secured loans, personal loan in Singapore need no collateral or guarantor, but they typically have higher interest rates.

Where to get Personal Loan in Singapore?

The two ways to get a personal loan in Singapore are:

1. Banks

The first and the most common place, where you can get your personal loan are the banks. Each bank differs from the other in repayment plan, interest rate and the maximum amount that it can sanction as personal loan. There are a few common requirements one has to meet before getting a personal loan which include:-

– Singapore Citizen or permanent resident

– Have annual earnings of more than $20,000

– Possesses sufficient documents including personal info, bank statement and salary slip.

– Minimum of 21 years old

2. Money Lenders:

The alternative to banks in Singapore is the money lender. Money lender is a licensed group of people or an individual who sanction large or small amount of money as a personal loan. Unlike banks, money lenders don’t have a fixed interest rate. With less paper work involved and instant available money facility, borrowing from money lenders is a smarter choice.

The main advantage of money lenders over banks is a faster process and the flexibility in loan repayment plans. In fact you can get your own terms of repayment devised by talking to a loan officer. Also the loan approval is fast and you can get hold of the cash within a day or two.

Don’ts:

– Don’t apply for a personal loan 2 or 3 months before taking out a major loan. Major loan includes a loan for house or a car. This is because it affects your DSR (Debt Servicing Ratio). DSR is the measure of the percentage of your monthly income that would be used in repaying your major Car or House loan. This includes the repayment of personal loans if any. Banks calculate an applicant’s DSR before granting a new loan,  and the more loans you have to repay, the less will be the amount of loan (if any) you will get from the bank.

– Never apply for a personal loan in Singapore if you are unsure about the penalty, bank may charge you a late repayment fee. Some banks have a very harsh penalty for late repayments which may include a huge increase in interest rate. So if two banks are offering you for same loan amount on the same interest rate, it is the late repayment penalty which should be the deciding factor for you.

Do’s:

– Be specific as much as you can while taking out a loan. For example there are loans available for renovation or house building. Getting personal loan for such tasks is never a good idea. This is because the banks feel safe about their money when you sanction the loan for a specific purpose.

– Always shop around the market and run a detailed search before getting a loan. The interest rates vary widely from bank to bank and the fact that your relative once preferred a certain bank should not dictate your choice of bank. This is because banks keep changing their policies and interest rates.

– Do figure out what is the late repayment fee. Some may offer lower interest rate yet may charge you a higher late repayment fee. Make sure that you don’t miss your repayment in the event  you take such a loan.

– Always think twice before taking out a personal loan. As mentioned before, the only way for the banks to benefit from giving out personal loans is the interest rate that they charge you. Never apply for a personal loan with the intention to invest that money in a high risk business. If things don’t turn out well, you will be spending the rest of your life to repay the loan.

Go here for advice on a Personal Loan

For advice on a new home loan.

For refinancing advice.

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