Introduction
Getting a personal loan is a big decision, but it can also be important. A personal loan can help you pay for medical bills, home repairs, or unexpected expenses.
It’s also a good way to consolidate high-interest debt and make monthly payments more manageable.
This guide will tell you how to get started with your search for the best Singapore personal loan.
We’ll also show you what to consider when comparing loans so that you can find one that works for your needs—and fits within your budget.
Consider your loan options.
Before applying for a personal loan, it’s important to consider your loan options. Here are some things that you should look into:
- Check your credit score. The first thing that lenders will do is run a credit check on the applicant, and this is because they want to know how reliable and trustworthy the borrower is based on their past borrowing behaviour. To learn more about how credit works in Singapore, click here [link].
- Check your eligibility for a loan. Once you know what type of loan fits your needs, it’s time to determine whether you can qualify for that financing option based on income and debt levels, among others. Use this calculator to help determine if you’re eligible for personal loans in Singapore.
Know your loan limits
Personal loan limits depend on your income, age, and credit score.
Let’s say you’re a fresh grad with no income and bad credit—you’ve maxed out your credit cards to pay for rent and an apartment. You need a personal loan to buy furniture for your new place.
If you have an average or above-average income but are under 25 years old, then the maximum amount of money that can be lent to you will be lower than someone who is older or has more experience building up their success.
If you have an excellent credit score (800+), then the maximum amount of money that can be lent to you will also be higher than someone who doesn’t have as high of a rating on their report card from TransUnion or Equifax.
Compare interest rates
The interest rate is the cost of borrowing money, and the lower the speed, the more affordable your loan will be. You can compare interest rates using a personal loan calculator or browsing through various lenders’ websites to see how their rates compare.
On average, personal loans have lower interest rates than credit cards due to their shorter repayment periods and lower risk for lenders.
However, if you plan on paying off your balance within six months or so (which almost everyone does), then it doesn’t matter too much what rate you get; both will be reasonable compared with other forms of credit like credit cards or overdrafts.
Fixed vs variable-rate loans.
You may also notice that some lenders offer fixed-rate loans while others charge variable rates.
A fixed-rate loan means precisely what it sounds like: your monthly payments will stay consistent over time regardless of any changes in market conditions that might affect other types of loans (like variable ones).
Variable-rate loans change according to prevailing interest rates at any given time, which means they may go up when inflation increases; however, these changes usually don’t happen very often, so most borrowers don’t need to worry about them too often either way.
Check the charges
Before committing to a personal loan, checking the charges is important. Charges can be a large part of the total cost of your loan.
They’re different for each lender, so make sure you understand what you’ll be paying in fees before you sign on the dotted line. Fees may include:
- Application fees – these is usually payable when you apply for your loan or during processing
- Processing fees – lenders charge these after they have reviewed your application and decided whether or not to approve it (processing time can take up to two weeks)
- Early repayment penalties – if you pay off some or all of your outstanding balance before the scheduled maturity date, an early repayment penalty fee may be involved.
- Arrangement fee – This covers costs associated with setting up your loan
Do your research
Before you apply, it’s essential to do your research. This will help you identify the lenders best suited to your needs and have positive reviews from others.
Look at reviews on social media platforms like Facebook, Twitter or YouTube. You can also check out review websites like TrustPilot and TrustRadius, which shows ratings from verified users who’ve used their services before.
The lender’s website should give you some idea of what service they offer—and whether or not their terms are reasonable for the amount of money borrowed.
Make sure that any potential lender has been operating in Singapore for at least five years and is licensed by MAS (Monetary Authority of Singapore).
While there are many different types of personal loans available in Singapore nowadays, some come with higher interest rates than others due to risk levels associated with different borrowers’ credit scores or income levels, so make sure all fees associated with a loan meet your requirements before applying.
Conclusion
A personal loan can be a good idea if you need money for an emergency or to make home repairs. It is important, though, that you carefully consider whether or not taking out a personal loan is right for you.
There are many different types of personal loans available in Singapore, and each comes with different terms and monthly payments.
Before applying for a personal loan, consider how much money you need, what you plan on using it for (such as paying off debt or making home repairs), and how much you can afford to pay back each month.