You might be considering taking out a loan in Singapore, or maybe you know who’s been thinking about it as well. And like many who have taken interest in taking a loan, you may be confused about the process of taking out a loan. It might be a little overwhelming for you if you are taking a loan for the first time.
So we’re here to answer the questions: where do I start and how can you get a loan legally in Singapore? Who are best money lenders and how can you find the best interest rate in the market?
These are just a handful of the essential questions that you need answers to because taking out a loan can have its own unique steps depending on your own circumstances, but these main steps will help you prepare yourself! In order to get the best-suited loan for your situation, you need to do the research. But to get you started we’ve provided 5 vital pieces of advice that will help simplify this process.
Assess Your Needs
Many people get caught up in the idea of receiving a large sum of money and think about all the things they can now spend it on. And though you should only take out loans when you have something specific in mind that you need to fund, many can often fall into overspending on other aspects due to their newfound wealth.
Any purchases made with your loan sum should be logical, and well calculated as this sum will eventually need to be repaid–and with interest at that! Loans should help you in a situation where you need extra funding, and not end up adding to your overall expenditure.
Check Your Monthly income
The most important thing you need to consider when taking out a loan and drawing up the repayment terms is your monthly income. This is because you will have to pay your loan back in a specific and pre-determined amount of time. So before you begin looking for a licensed money lender, you need to consider your monthly income because it will not only determine the amount you will receive but also your ability to make these repayments.
An average Singaporean earns approximately $30,000 annually and you can get a loan up to 6 times your annual income. People with a lower than average income can also get loans but will generally qualify for a lower amount.
Are you going to use collateral
In a general sense, loans in Singapore typically fall into two categories – the secured ones and the unsecured ones. If you are planning to take out a personal loan in Singapore then you have to provide some sort of security for the loan, which comes in the form of collateral.
The security can be something substantial such as a car, home or something you own that holds significant monetary value. The unsecured loans do not need you to come up with collateral and your money lender will only look for your ability to pay it back. This seems easier in theory, but due to the lack of security for the loan firm, it may be harder yo get a loan, and your interest rates will be higher as well.
The interest rate
The arguably most important thing you need to look into when taking out a loan is to look at the interest rate you receive. This of course, hugely influences how much your overall expenditure will be in the long run because you will have to repay your loan!
In order to get a clearer idea of how good of an interest rate you’re getting, you need to compare the offers from different money lenders by meeting with them, or speaking with them.
Lastly, you should look at the repayment schedule and period and set it accordingly. You will be able to draw up these terms with your licensed money lender, and come to an agreement that will best suit your financial circumstances. Do note that when you’re dealing with authorised money lenders, they should provide you, in clear detail, all the loan terms that will be involved in your loan.
Advice When Taking a Loan in Singapore
While there may more research you need to do, and other steps you may need to take with your unique loan, we hope these pieces of advice help you along the way! But if you find yourself in need of a loan, and with tons more questions, just leave us a comment below, or contact us on our hotlines: (+65) 62244746 (Yishun) and (+65) 62244749 (Tampines).