Ever felt that you are not ready to apply for a loan? Do you have bad memories with your past loan applications? Are you planning to apply for a business loan and have heard how difficult and inconvenient it is to go through the process? Getting assistance through money lending in Singapore, whether it be a bank or other non-traditional financial services provider, is relatively more straightforward now with the emergence of many lenders and loan options for the public.
The reason why people have a hard time in processing and even accomplishing the requirements for a loan lies on their inadequate preparation. We are not just talking about unprocessed paperwork or confusing documents or financial history. We are talking about the preparedness of a person in getting a loan in the first place and the unclear financial plan of the loan applicant.
Here are a few tips that can help you make your loan application process smooth.
Be Aware of the Total Debt Servicing Ratio
The Total Debt Servicing Ratio is perhaps the most basic criteria to know if you are qualified or not. This is the framework that is mandated by the Monetary Authority of Singapore for moneylenders and financiers. In a nutshell, the TDSR (Total Debt Servicing Ratio) prevents risky financial decisions of the applicants by screening what can be loaned so that the loan applicant will be able to complete his or her payment.
A good rule of thumb to know if you are eligible or not is to know what your total income is and then apply 6 parts debts to 10 parts income or assets. What this means for you is that banks will accept your loan if your assets or income is greater than the loan and that the loan consist of 60% of your income, more or less.
Build a Good Financial History
Having a lot of loans is understandable, provided they are different loans (personal, business or payday loans). However, if your loans are near or is already at 60% of your income, you might have a harder time to have your loan approved. Of course, some lenders are allowed to give you a loan even higher than 60%, but they will only do that if you have a good relationship with your lenders.
What you can do is to consolidate your debts to only one or two moneylenders in Singapore. That means less headaches for documentation as well as a better business relationship with one provider. In fact, applying to a different moneylender can also be facilitated better if you have a good history of loyalty. If you are still having troubles getting a loan with reasonable rates and conditions, contact us at Fast Money so that you will have a much better option for your cash needs.