There may be a point in your life where ‘savings for a rainy day’ might not be enough to tide you through a tough financial situation. Be it to pay for an unforeseen medical bill, or urgent home renovation, considering an urgent loan could be a solution to your problems. But what if I am currently unemployed? Can I still apply for an urgent loan for unemployed in Singapore?
Why unemployment can negatively affect your loan application
Contrary to popular belief, you can still successfully obtain an urgent loan even though you are unemployed. To apply for any type of loan, you must first find out if you are eligible for it. Loan eligibility requirements include minimum salary, proof of employment etc. Most banks and financial institutions require loan applicants to be gainfully employed and show proof of income when applying for a loan. This enables lenders to assess your loan repayment capabilities.
However, for those who need an urgent loan for unemployed in Singapore, this may prove to be a challenge. But don’t be discouraged, as you can still get your loan application approved. Here are five essential tips for the unemployed to be successful in getting an urgent loan:
5 Essential tips to get a successful urgent loan for unemployed
1. Maintain good credit history
Your credit score determines how financial institutions such as banks and authorised money lenders in Singapore view you as a borrower. A good credit score indicates that you have been diligently paying off your credit card debts or other loans on time, and the chances of your loans getting approved is higher. In Singapore, your credit payment history is recorded by the Credit Bureau Singapore (CBS), where you can check your credit history with banks in Singapore.
If you’re looking to apply for a loan with a licensed money lender, they will check your details such as your existing outstanding loan principal amount with other moneylenders, total payable amount, repayment records and borrower’s current borrowing limits with the Money Lenders Credit Bureau (MLCB).
While money lenders don’t usually consider your credit score with CBS, a good credit score can most definitely help you get your loan application approved, especially if you are unemployed. So ensure that you maintain a good credit history by repaying your loans on time and not defaulting on them.
2. Get alternative sources of incomes
The good news is you don’t have to be employed full-time to successfully apply for a personal loan. Alternative sources of incomes i.e. part-time jobs, freelance, contract jobs, and passive incomes from rental payments or investments are considered as “proof of income”. As long as there’s funds coming in and you’re able to prove to the lenders that you can effectively pay off your loans, you can apply for an urgent loan for unemployed in Singapore.
3. Consider taking up secured loans
A secured loan is a type of loan that is backed by your assets such as car, property, or jewellery as collateral to the lender in case you are unable to repay your loans. In the event you can’t pay off your loans, the lender has the right to sell the asset you pledged to pay them off. This provides more security for lenders, lowers the risk of not getting their money back and in turn grants you a higher probability of getting a loan, even if you are unemployed.
4. Negotiate and commit to a repayment schedule you can adhere to
To effectively pay off your loans, you will need to first ensure you can afford the repayments. While it is tempting, don’t borrow more than what you need. The more money you borrow, the more you’ll have to pay back.
Lay out your monthly finances e.g., bills, mortgages, groceries. Then, add the potential loan installments you must pay into the above expenses and see if you can afford to pay them all in a timely manner. Note that if you’re late in repaying your loans, you will incur late payment interest of maximum 4% per month for each month the loan is repaid late.
Hence, don’t commit to a repayment schedule and frequency you’re not confident of adhering to. Inability to pay off your loans on time can also negatively affect your credit history.
5. Choose interest rates with your financial situation in mind
Interest rates are probably one of the first things borrowers consider when applying for a loan. Depending on your current financial situation, sometimes engaging money lenders with low interest rates might not be the best option for you as it might come with a shorter repayment period. This means you need to pay higher monthly installments, which can be a challenge if you are unemployed or don’t have a regular stream of income.
Many licensed moneylenders in Singapore offer affordable and flexible repayment on a case-by-case basis. Do your research before committing to a lender. Find one that can provide what you need – good interest rates, a flexible repayment schedule, and reasonable repayment conditions you can work with even if you’re unemployed.
Also, keep in mind other considerations when getting a loan such as processing and late payment fees, should you not be able to pay off your loan on time.
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