Why would you even want a personal loan?
Well, there might be a number of reasons, but they all come down to a particular situation type: you need a large sum of money, you need it right that instant, and the idea of entering credit card debt sets your teeth on edge. Personal loans are pretty good way of solving sudden financial emergencies in a jiffy, and even though you will have to pay them back, the conditions for that repayment tend to be less grueling than others. E.g. nobody will be coming around to seize your home if you fail to make a payment, because a personal loan is classified as “unsecured”. Click here for more information about how unsecured loans work.
Some of the most common life situations for which people tend to take out personal loans include various family emergencies, sudden enormous medical expenses, vacations, weddings and honeymoons, consolidating debts, having to pay off their credit cards, or facing educational expenses such as textbook costs or college tuition fees.
Is the personal loan option the right way to go?
Even if you find yourself in one of the situations listed above, stop to consider whether a loan like this is the best solution before you rush to take one out. Here are a few things to mull over first:
Be certain you can repay it; avoid the common trap of thinking “I’ll cross that bridge when I get to it.” You will likely not and defaulting on this arrangement will blow a bad hole in your credit score, damaging you in the long run.
Only reach for a formal loan after you confirm that no-by-line options are unavailable, such as borrowing the money from your friends or family. They will definitely be more accommodating in terms of paying it back. Also, ask at your credit union or chosen local bank about what options they offer. They may have better deals for you. Bottom line is, always look at the alternatives before you make a decision.
Get informed about what you will have to pay. Personal loans usually entail a fixed monthly payment, so dig up that information before you commit. It will help you determine whether or not you would be able to pay it back on schedule and avoid interest rates piling up, plus it will be a great tool for adjusting your budget for the foreseeable future. Tools for loan comparison can give you a pretty good picture of what different providers are like.
Related: Start a Business in Singapore – Why Are Debutant Entrepreneurs Attracted?
What personal loans can you get in Singapore?
The actual on-location personal loans that you can get tend to vary slightly around the world, depending on local economy and legislature, although their basic format is more or less the same anywhere. When it comes to Singapore, if you are getting a loan via a bank lender, there will be roughly three basic loan types that you can count on.
The personal installment loan is the most well-known. With this, you get a given amount of cash onto your hands, upfront, and you pay it back over a given span of time in fixed monthly increments. This type of loan is available for any emergencies, even the non-life-threatening ones, like weddings.
Next are the credit line loans. These work on a as-needed basis. The lender sets an amount of money you can draw from your credit line at a time, and you can borrow this money whenever you want. The amount of money you borrowed and the time for which you borrowed it determine the interest that you will have to pay. Once you clear it off, you will not need to pay any more until the next time you draw a loan from your line of credit with that lender.
Finally, there are the balance transfers. What this does is, it lets you transfer all of your outstanding loans into a single place. Many lenders give a grace period. During this time, you are not charged any interest. This grace period typically covers between six and twelve months. A balance transfer is an excellent way of making your debts more manageable, since everything is pooled into one account, with one monthly payment, so budgeting is way easier.
What do you need when applying for one?
In Singapore, to get a personal loan, you must be twenty-one to sixty-five years old and have a minimal annual income of S$30,000 to qualify. Foreigners need to make at least S$40,000 – S$60,000 (different lenders have different requirements). You will also need to submit this documentation:
Proof of address, like a utility bill with your residential address, then proof of income, e.g. your latest Income Tax Notice of Assessment, and proof of identity (Singapore Employment Pass or ID Card).
