Loans get a bad name and are widely regarded as the archenemy of any budget. However, that is not always the case. A loan that you get from a legal money lender in Singapore may actually help you stay within the confines of your budget.

All you need is a little discipline and to follow the five rules of thumb that we explain here.

1. Only borrow from legal money lenders

Perhaps the worst mistake that anyone can make with their finances is to borrow money from an unlicensed money lender. Loan sharks prey on the vulnerable – their offers may seem reasonable at the outset but they are designed to entrap you with exorbitant interest.

By contrast, every legal money lender in Singapore is regulated by the Ministry of Law. Interest is capped at 4% per month and there are several similar financial protections for consumers’ benefit. A loan from a licensed money lender can help you address your cash needs in the short term and balance your budget in the long term.

2. Get a debt consolidation loan

If you are drowning in debt and haemorrhaging your income to pay various creditors just to survive, the odds are that you would benefit from a debt consolidation loan. As the name suggests, this loan addresses all your creditors by merging your financial obligations into a single pipeline.

One critical advantage of this approach is the clarity that it brings. When you no longer have to juggle multiple debts with their varying rates and terms, it is easier to visualise your way out. It puts into perspective how much you have to pay and for how long. That light at the end of the tunnel is a great motivator to budget and break free financially.

3. Build discipline

For many people, obtaining a loan is an educational journey that encourages the individual to take better charge of their money, and to be responsible for their actions. This applies regardless of whether the loan is from a major bank or a legal money lender in Singapore.

As a borrower starts to pay down their debt through consistent repayments, it should instill in them the importance of planning for their future as well as spending their hard-earned money wisely.

Rather than damaging your budget, it becomes the foundation of competent financial understanding. Accordingly, credit agencies award someone who has incurred debt and paid it off a higher rating than someone who has never been in debt at all. It opens the pathway for bigger loans from legal money lenders in Singapore and lowers interest rates in the future.

4. Pick the right loan

Continuing on the theme of financial education, choosing a loan from a legal money lender is akin to a lesson in independence. Sure, you may ask for assistance to understand the terms and conditions, as well as your obligations at the beginning. However, the systematic and regular repayment schedule will teach you good financial sense over time.

The odds are that you will begin to understand the concepts and find yourself gradually realising that you are capable of handling such a responsibility. Many people who take on formal debt find themselves unwilling to go through the embarrassing experience of asking for money from close friends and relatives ever again. Wouldn’t you like to join that group?

5. Stick to your payment schedule

Every legal money lender in Singapore must ensure that you understand the terms of a loan before approving it. One of the most crucial pieces of information they will share with you is the payment schedule. It outlines how much is to be paid and when.

If you pay the required minimum amount to service the loan (and not just the interest on it), you will be free of it within the time window as planned. This is the best of both worlds – it allows you to use the money from the loan in your personal life every day and still eliminate the debt at the time of your choosing.

Conclusion

Sticking to a budget can be a chore but the quick infusion of cash with a loan from a legal moneylender in Singapore can help. If you stick to the five rules above, there is no reason why you cannot both stay on track with your spending and manage a loan simultaneously.

If you need a loan as well as some assistance with financial planning, contact LoanHere today.

There has been numerous media coverage on loan scams of late as the Covid-19 pandemic has enticed more and more cunning scammers to ‘upgrade’ the tricks under their sleeves to trap desperate individuals into getting a loan scam.

We are certain that most of you have heard stories of people being scammed and scratched your heads as you wondered how people could be deceived so easily.

The reality is that these scammers are persuasive as they are charismatic: a few words, dashing smiles, some strategic ego-brushing, and you’re under their spell.

Thankfully, there are ways for us to distinguish between legitimate loans and loan scams. So, before you decide to take out a personal loan from a licensed money lender, bank, or financial institution in Singapore, look out for these tell-tale signs:

1. Upfront payment

If you are required to pay an upfront fee or deposit to take your personal loan application forward, it is likely a scammer trying to make off with your money.

Just ask any bank or licensed money lender and they will confirm that a legitimate lender will never ask you to make any payments before receiving the loan. The act is deemed illegal in Singapore.

Therefore, if you find yourself in the presence of a so-called loan agent or consultant explaining that the upfront payment is for mandatory processing fees, advance repayments, or collateral, you should say your goodbyes and walk away immediately.

2. Missing physical address

Scammers will do everything in their power to make it impossible for you to get hold of them in the future. How, exactly? By failing to provide a real, physical address, of course.

This is done intentionally. Without a physical address, it will be incredibly difficult for you to press charges, let alone for the authorities to pursue them.

Before you get swept away by the perks of applying for a personal loan, put the brakes on until you can confirm the existence of a physical address.

3. No state registration or licenses

One of the biggest tell-tale signs that you are getting scammed is that the business doesn’t come with any legal license or registration details. In Singapore, it is mandatory by law for every licensed money lender to be registered with the legal authorities.

If a sketchy individual approaches you with a personal loan plan that wows you, remember to ask for their license and registration number to prove their legitimacy. In Singapore, every legitimate and authorised money lending institution is registered with the Registry of Moneylenders. Remember, you are always free to cross-check the information you’ve gathered.

4. No credit check

Did you know that credit checks are important for banks, licensed money lenders, and financial institutions as it helps them determine how financially trustworthy you are?

On the contrary, scammers wouldn’t even spend five seconds doing a credit check as they intend to scam you out of your money.

While credit checks can be a hassle, it appears that the hassle is necessary to prevent us from getting scammed when we apply for personal loans.

If the lender is making guarantees that are too good to be true before even running your financial history, that is a clear indicator to keep your guard up and be cautious.

5. Incomplete loan offer

Most scammers will prepare a mock offer in black and white that passes the bare minimum for a loan offer for the sake of deceiving their victims’ eyes.

If you look closely, you’ll find many flaws in the document, such as blanks on where the agreed interest rates and processing fee should be. This is why it is incredibly important for us to always read the fine print before signing any personal loan documents — it’s just good sense and it makes things easier for us to pick up red flags that would demand us to walk away and never look back.

Bottom line

As enticing as it may be, you need to stay alert as there is no such thing as a flawless (or free) personal loan.

• Licensed money lenders will not apply pressure to push you to be agreeable
• Scammers have a habit of offering deals that are too good to be true, such as offering 0% interest rates or 100% approval

Also, take note that a licensed money lender, bank, or financial institution will never ask for your debit or credit card details.

Speaking of card details, it is always best to refrain from sharing your identification number, driver’s license, or any other personal information until you are 100% certain you are dealing with a legitimate loan agent or consultant.

Unfortunately, we live in a time where a handful of irresponsible individuals are taking advantage of the financial woes experienced by many to feed their pockets. While personal loans undoubtedly have many benefits that can help us improve our credit score, manage debts, and provide us with financial assistance at short notice, let us be more vigilant in ensuring we are dealing with the right people when taking out a personal loan in Singapore.

Reach out to LoanHere to get free loan quotes from the top licensed money lenders in Singapore now!

Trust is essential in any relationship, whether it is a personal or commercial one. It is especially crucial in matters that involve money. Anyone who intends to take a loan must ensure that they are dealing with a legal and reliable lender. It is not as simple as reading a money lender review but involves a host of other precautions as well.

This is because irregularities occur despite Singapore’s strict money lending laws and regulations. In some of the more shocking cases, a child as young as twelve and a teenager aged fourteen have been arrested for involvement in illegal money lending activities.

Even legal money lenders have been caught flouting the law. Investigations revealed that the lender had deliberately omitted necessary information such as the loan principal and interest rate from the loan agreement. Money lenders are required by law to include this crucial information in the loan contract before borrowers sign it – so if you intend to take a loan, it’s important to take note of this.

Some of the basic relevant laws that every prospective borrower should know are:

• Money lenders need to be licensed to operate their businesses legally, so when you are at their office, remember to check that their license certificate is displayed.
• Licensed money lenders must be registered with the Ministry of Law, abide by its guidelines and regulations, and adhere to the Moneylenders Act. (Note that these guidelines are regularly updated)

The trustworthiness of money lenders depends mainly on their adherence to the money lenders’ laws and regulations.

What is the Moneylenders Act?

The Moneylenders Act is a set of legislations enacted to regulate the Singapore legal money lending industry. Within it are all the legal requirements and guidelines to which every licensed money lender must adhere.

The Act also specifies that the Moneylenders Credit Bureau (MLCB) shall oversee the industry by maintaining a database of borrower data and other relevant information. The MLCB shares this information when a borrower makes an application for a loan from a licensed money lender registered in Singapore.

How to ensure that your money lender is licensed and can be trusted?

There are three main elements to ensure that you select the right money lender. The first is licensing, which tells you that the company is a legal entity registered with the government. The second is their operational norms, which are indicative of their professionalism. The last is trustworthiness, which you can verify with information from a moneylender review or similar testimonials.

Check the money lender’s license and legality

The official list of licensed money lenders in Singapore can be found at the Registry of Moneylenders on MinLaw’s website. However, that is only the first step. You should also follow up with these precautions:

1. Call the money lender’s office landline listed on MinLaw’s list to check if they are indeed the lender. Sometimes, there are illegal money lenders who give themselves the same name as a registered business. However, they list their number to dupe unsuspecting clients into contacting them instead of the legitimate business.
2. Verify that they have a physical office at the address listed on the Ministry of Law’s register. This is because the law prohibits any official loan approval without face-to-face verification as a means to combat financial fraud and identity theft. A lender may offer applicants tentative approval online or over the phone, but the loan contract must be signed in person.
3. When you visit the money lender’s office, you must see their license certificate displayed.

Check operational norms

1. How did they advertise to you?
   Licensed money lenders are given a strict set of advertising guidelines to follow. Their ads may only appear in business or consumer directories in print or online, on their websites, or outside their registered offices. Unsolicited SMSes and email messages, flyers, and cold calls are not legally permitted.
2. Are they lending you more than what you can borrow?
   It may seem as if they are doing you a favour, but be wary of anyone who offers you large loans despite your financial circumstances. The law has strict limits on the amount of cash a person may borrow at a time.For example, if you are a Singaporean or Permanent Resident and earn less than $20,000 a year, you can only borrow up to a total of $3,000 (regardless of the number of licensed money lenders you are taking a loan from, this is your borrowing limit). More detailed criteria can be found here.
3. Ensure that your loan terms are legal
   Ensure that the loan interest rate, late payment interest rate, and the fees and charges listed in the loan agreement fall within the limits set down by law. The maximum interest that can be charged on the loan and overdue payments is 4% a month each.Loan approval fees are capped at 10% of the loan principal, and late payment fees cannot exceed $60 per month.
4. Read your loan agreement carefully before committing to it
   Before you sign on the dotted line, read the loan agreement carefully, including the fine print no matter how tedious it may seem. Ensure that all the necessary information such as interest rates, fees and charges, loan term, due date, etc, are clearly specified and within legal limits.
5. Ensure that your lender treats you with respect
   Licensed money lenders are required to follow a code of conduct set by MinLaw that treats all borrowers with dignity and respect. This is regardless of whether you are keeping up with payments or have fallen behind.

If you default on your payments, they are limited to 3 courses of action to recoup their money:

a. Send a Letter of Demand (LOD) to you by post to your residential or office address.

b. Visit your home or office to recover the debt themselves or through a certified debt collection agency.

c. Pursue the matter in court.

If they harass you, you can call the police or file a complaint with the Ministry of Law.

Check trustworthiness – money lender review

A money lender review is a quick and easy way to gauge the trustworthiness of any legal money lender. You can find them online such as on Google reviews simply by searching for the lender’s business name. These reviews give you an insight into how other customers feel after having dealt with them.

Before taking the leap

With this post, you have all the basic information you need to identify a trustworthy money lender in Singapore. However, criminals are always changing their modus operandi so you should remain vigilant. We also wrote this article to show you how to identify the most common loan scams.

LoanHere is one of the most established and trusted legal loan aggregators in the industry. We don’t offer you loans but rather bring you the best offers from established legal Singapore money lenders and help you compare their rates and terms.

Save yourself hours of searching and avoid the risk of scams. Get a loan quote from us now.

A guarantor is someone who agrees to pay a borrower’s debt if the borrower is unable to do so. Every good legal money lender in Singapore gives its clients the option of having a guarantor if they do not qualify for a loan themselves.

If someone has asked you to act as guarantor, it is a testament to your financial standing as well as the trust that the borrower places in you. However, financial matters tend to come between friends and family. You should take such a step only after adequate consideration.

Here is what you should know before you and after you sign the contract, and after the loan has been settled.

Before signing – the precautions

A guarantor does not receive any money directly from the legal money lender or the borrower. However, they are liable for the entire loan amount, all interest, and any fees or penalties associated with the loan. If you place yourself in this lopsided equation, be aware of these four things:

1. Loan terms

Every licensed money lender in Singapore offers a range of different loans and each comes with unique terms and conditions. For example, a business loan may be linked to commercial profit. If you are co-signing such a loan, go over the business plan yourself to assess its likelihood of success. Only then should you consider becoming a guarantor.

2. Privacy issues

The document requirements for a guarantor are the same as those for a borrower. You will have to share your personal and financial information, including your credit history and current financial circumstances, with the money lender in Singapore. The borrower will also see this data during the loan assessment process.

3. Credit repercussions

When you co-sign as a guarantor, your credit score is affected in the same way as if you were the sole borrower. It reduces your ability to take on additional debt from a legal money lender until the loan has been repaid in full. This affects your chances of getting a home loan, car loan, credit card, or even an overdraft.

4. Consequences of default

If the borrower fails to make payments on time, you are responsible for all cumulative late fees, admin charges, and additional interest. Even the best money lender in Singapore will pursue you for the full amount due. This could add up to twice the original loan amount (a limit placed by Singapore law).

As we have seen, there are several serious concerns a guarantor must be familiar with. Do not allow anyone to pressure you into becoming a guarantor for them. It is your financial health on the line and the decision is solely yours to make.

Are there any advantages of being a guarantor?

Yes, but the advantages are fairly limited: There may be a positive impact on your credit score. This score takes into account how often you take on debt as well as the diversity of that debt. Acting as a guarantor widens your credit base and, especially if the loan is settled on time, tells banks and licensed money lenders in Singapore that you are a trustworthy borrower.

With a better credit score in tow, banks as well as the best money lenders in Singapore may offer larger loans, lower interest rates, and longer repayment periods. Apart from the possibility of saving money on your loans, you could even qualify for more lenient terms as well.

Throughout the loan repayment period

As a guarantor, you do not receive any money from a money lender in Singapore, but you must still keep abreast with the repayment progress. Always maintain a close relationship and communicate regularly with the borrower. Ask them to come to you before an instalment is due if they are struggling to gather the funds.

With this approach, you can foresee and circumvent missed or late payments, and the additional costs associated with defaulting. You will also prevent any damage to your credit score.

After the loan has been repaid

No one particularly enjoys being a loan guarantor because it is an additional burden that offers limited advantages. The person for whom you co-signed the loan may make every payment on time and repay the loan themselves, but it may still be best to avoid becoming a guarantor for them repeatedly.

Instead, help them gradually build their credit. If they need a loan again but you would rather not stand as guarantor, bring them in to speak to our LoanHere loan experts. We work with the best money lenders in Singapore to provide a wide range of loans that cater to your needs (e.g. personal loan, renovation loan, study loan, vacation loan, etc).

Life happens, and sometimes you may be stuck in a rut when faced with an emergency, requiring a large sum of cash that you don’t readily have. Sometimes, you may also need a better money-saving alternative to high-interest rate credit cards for a big-ticket expense. 

Instant personal loans in Singapore can help you to save money when used responsibly. Personal loans can be used for just about anything such as renovating your house, paying off your student loans, taking out a new mortgage, planning a wedding, and so on. While loans are usually tied to a specific purpose, the beauty of personal loans lies in their flexibility and attractive personal interest rates. Find out how instant personal loans can be a great option to help you save money.

When should you use one?

Before taking out any type of loan, always ask yourself if you can repay it. Instant personal loans are best used for purchases that you intend to repay in less than 5 years so that you don’t risk accumulating debt. You can easily find a personal loan promotion in Singapore which you can use to fund a one-time big expense. There might come a point in time where you may require a huge amount of cash for emergencies such as medical expenses or even personal milestones such as a wedding or home renovation. 

Since personal loans are used at your discretion, make sure to devise a payment plan to see if you can repay the loan in the shortest time possible. This can help you save up some cash for a rainy day while still being able to pay off your debt at a lower personal loan interest rate compared to other money lending options.

Debt consolidation loans

A debt consolidation loan is one of the most popular and smartest instant personal loans you can use to pay off existing debt. It can help you pay off high-interest credit card debt with a lower personal loan interest rate. As our financial commitments pile up, it can be tricky to keep track of the various types of loans we have. Using a debt consolidation loan to combine your different debts into a single payment can help make repayment more manageable and stress-free for you. It would be a good option to consider especially if you are already in debt.

Of course, this is assuming that you do use an instant personal loan wisely to pay off your debts and not as a tool to postpone or accumulate them further. 

Ditch high-interest rates

Another way a personal loan in Singapore can help you save money is that it can absorb a higher interest loan with a lower interest one. If you have a good credit score, you should have no problems obtaining a lower interest rate compared to your credit cards or other money lending options.

If you qualify for a lower personal loan interest rate, make sure you can repay the loan over the stipulated repayment period to save on interest rates and help you clear your debts quickly.

For example, if you have an existing $10,000 debt with an interest of 12%, having an instant personal loan with 4% interest would help you pay off this debt at a lower interest rate, thus allowing you to save more as you would be paying less than half the original interest rate.

The bottomline of using a personal loan in Singapore to refinance your debts is that it can help you save more money if you manage to secure a lower personal loan interest rate. It can also help you fund big-ticket expenses during emergencies that you can comfortably repay over a period of time.

Most of us are familiar with the concept of an instant cash loan in Singapore and it is not uncommon to hear some who speak about it indifferently. Although the functionality of most loans adheres to a very similar underlying principle, it is crucial to distinguish between the options as it would be unfavourable to be caught up in a bad situation of being unable to pay. In this article, we shall discuss the most common types of instant cash loans in Singapore and the range of options available to ease off our monthly financial strain, and also put into perspective how they may be a solution to common financial predicaments. 

Instant cash loans in Singapore and how to ensure eligibility through a healthy CBS and BTI report.

An instant cash loan is a loan acquired almost immediately from a financial institution and usually so, without the need to pledge any collateral. Thus the only metric left for institutions to measure their default risks for these quick loans would be the borrower’s creditworthiness itself. This is determined by evaluating firstly the credit bureau score (CBS) report and secondly, by ensuring that the borrower’s balance to income (BTI) is within acceptable levels. The most common types of instant cash loans in Singapore include personal loans, payday loans, and microloans. 

Instant cash loans in Singapore have grown recently to be an integral part of the society we live in, mainly due to increased consumerism, attributed to e-commerce and the ‘buy now pay later’ campaigns that encourage excessive personal spendings. However, it is important that we understand the institutions offering them, the key differences between the loans and also, how we can use them to better manage our finances. 

Institutions offering instant loans and how they can be used to aid out financial obligations. 

The most prevalent type of instant cash loan in Singapore is known as a  personal loan, and it can be applied from a bank (through a credit card or line of credit) or from other financial institutions such as licensed money lenders. It’s no doubt that we live in a society that inherently discourages the debt culture, yet, it is critical to understand that a personal loan may be the solution to the problem of a large credit card bill or purchase, and it can also cushion our monthly loan obligations. Instead of spending a large portion of our income on an impending huge ticket item purchase, an instant loan may be a better solution to segregate the large payment into smaller monthly payments. Also, if we are unable to pay our credit card bills promptly, due to a financial strain, an instant loan may come in handy to meet the payment schedules and to avoid the exorbitant default fees and interest rates which revolve between 25% to 29% per annum. An instant loan would enable us to save on such high-interest payments since they typically charge somewhere around 7%-9%. This would enable us to lower the total interest payable on borrowed funds (eg credit cards?). Furthermore, a key consideration for creditworthiness is timely and complete payments. Hence, the use of an instant loan may enable us to properly plan and scatter our monthly payments in order to keep to our payment due dates.

Payday loans (another type of instant loan) and why they are not always necessarily bad due to their relatively higher interest rates.

With the rise in the cost of living, especially in Singapore, it is becoming more common to see individuals (especially young adults) requiring financial assistance till their next paycheck. Payday loans are mostly suggested to these individuals who may require a bit more money to ride through an unplanned and tough period or for those who may need a little extra assistance just to tide through till they receive their salary. These loans are often short in terms of tenure (1-3months). Also, the interest rate charged would usually be in the double digits suggesting that this type of loan tends to be very expensive. It is always recommended that we lower our debt obligation and always secure a lower interest rate. However, we cannot completely negate that some loans are structured as such and even with a higher interest rate, it may still be the better alternative due to its lower tenure period. 1-3 months of 10% interest would be more desirable than a 2% interest being charged over 2-3 years. For this, always calculate the total interest payable to make a better decision on the type of loan that fits your personal requirements in order to achieve the best financial outcome for yourself. 

Instant loan for entrepreneurs; microloans and ensuring a business loan is kept separate from our personal finances.

Widespread information and globalisation have inevitably given birth to entrepreneurship now, more than ever. Starting up a business comes with infinite hurdles, the most common of all being, funding. Microloans are instant, short-term loans that may assist individuals or businesses to ensure smooth monetary transactions and a financial buffer in the event of any corporational delays in terms of sending and receiving money. These loans usually provide a much longer tenure to ensure that the business is fully settled before it has to succumb to huge capital outlays and also provide flexible terms to suit the nature of the business structure. It’s good news for all entrepreneurs to know that funding and financing have become an integral part of the society we live in and they can fully focus their efforts towards ensuring the success of their business model without the worry of acquiring investors, etc. This loan can be your immediate quick fix to your cash flow delays. 

It’s critical to fully understand the types of instant cash loans in Singapore before we apply for them. It’s never too late to seek financial advice by reaching out to banks or licensed money lenders to fully understand the depth of taking up a loan. Also practicing good payment habits like paying in full and on time will increase their future chances of applying for another loan, if necessary. 

Readers, wouldn’t you agree that life is unpredictable? It’s so unpredictable that one day you’re on top of the world, living comfortably and the next, you’re weighing your options to get out of a temporary monetary hiccup. In fact, many folks face financial setbacks due to the economic crisis that was triggered by the Covid-19 pandemic.

Fortunately, the lending industry in Singapore acts as a saving grace for many Singaporeans and permanent residents for a multitude of reasons. But what could those reasons be, you ask? Well, get comfortable as we share with you the 10 most common reasons why people apply for personal loans.

#1 Going Back To School (Education Loan)

Going back to school is always an advantageous decision as it will surely benefit your career growth in the long-run, especially if your career field gives you the option to specialise in a certain area. But, if you’re short on savings, you might be inclined to put this dream on hold. Fret not! A personal loan, from banks, licensed moneylenders or financial institutions is the practical solution to help cover your tuition fees. So, if you’ve been putting your dreams of furthering your education on hold, here’s your chance.

#2 Walking Down The Aisle (Wedding Loan)

Weddings don’t have to be extravagant, but it can certainly be costly! Did you know that the average wedding cost in Singapore is between SGD30,000 and SGD50,000? Just ask any married couples within your circle of families and friends. Luckily, personal loans have made it possible for both Singaporeans and permanent residents to wed the love of their life in a ceremony or banquet of their dreams.

#3 Improving Your Humble Abode (Renovation Loan)

It’s always exciting to come home to a home that is infused with your personality and lifestyle — furnished and decorated just the way you like it. That is, before you notice the cost you’ll incur to creating your dream home. Don’t worry; banks and licensed moneylenders have made it possible for you to design your dream via personal loans… so long as you’re 100% confident in the design of your upgraded and improved home.

#4 Seeking Medical Attention (Medial / Surgery Loan)

Medical treatment is expensive and let’s not get started on the cost of surgeries. However, some advanced or specialised medical treatments and surgical procedures are necessary, especially if you’re diagnosed with long-term illnesses or sustained severe injuries. But, before you go wide-eyed and sigh over the estimated cost, take comfort in the fact that personal loans in Singapore have made it possible for Singaporeans and permanent residents to seek medical treatment in Singapore.

#5 Investing In Properties (Investment Loan)

Have you been eyeing a property that your gut-feeling knows has immense money-banking potential, but lack the funds to move forward with the potential? Well, don’t lose hope just yet! An investment loan can be used for any type of real estate investing purposes, whether it’s commercial real estate or residential. So, now that you know a personal loan can help you secure the property, all that’s left to do is to take a sip of coffee and pen out your investing strategy.

#6 Selling or Buying A House (Property Bridging Loan)

Speaking of properties, did you know that a personal loan in Singapore can totally help you ‘bridge the gap’ if you find yourself short in cash to buy a new house and sell your old home? In fact, the loan is designed specifically to offer homeowners a short-term loan to help them secure their second property while they secure a buyer for their existing home, even if you’ve already have a mortgage. Basically, this personal loan allows homeowners to traverse the gap between buying and selling legally.

#7 Keeping Your Business Afloat (Freelance Loan)

If you’re a business owner, then you’re probably aware how challenging it can be to keep your business running, especially while the pandemic is still at large. For some business owners, they would relish on the opportunity to pay the payments of their suppliers and the payroll of their employees rather than tightening the belt around their waist. How? Why, through personal loan, of course! Whether you take out a loan with banks, licensed moneylenders or financial institutions, personal loans have made it possible for business owners to keep their doors open.

#8 Covering The Costs of Your Vehicles (Private Hirer Loan)

Any Grab, Gojek or private drivers amongst us? We totally understand that the cost of maintaining your vehicles can be expensive, especially if you’re working as a private driver or running a hire driver business. Thankfully, private hirer loans exist to offer you some relief should you find yourself scratching your head to fork out the necessary funds to maintain your vehicles. With a personal loan, you’ll never have to worry about your vehicles being late for maintenance.

#9 Managing Your Debt In A Breeze (Debt Consolidation Loan)

Let’s be honest, managing multitude debts with different payment dates can be a hassle. A practical solution to your problem is applying for a debt consolidation loan! Thanks to the personal loan, all your debts will be streamlined, which makes it that much easier for you to keep track of your debts as well as making payments. In doing so, you will never have to worry about late payments or forgetting any debts.

#10 Streamline Your Credit Card Debts (Credit Card Consolidation Loan)

Like a debt consolidation loan, a credit card consolidation is used to pay off your credit card balances along with its high interests. This means that instead of making multiple credit card payments every month, a personal loan will help you make a single payment. Now, wouldn’t that make life much simpler?

Thanks to personal loans via banks, licensed moneylenders and financial institutions, personal loans have undoubtedly helped many individuals and businesses. So, if you’re looking for a little extra cash (for the right purposes!), then don’t write off personal loans.

Personal loans have become very common among Singaporeans as it is a fast and easy way for an individual to get a lump sum of money to support their needs. In 2020, nearly one in three Singaporeans had applied for personal loans to cover their cost of living which include buying daily necessities and paying their rent due to the financial impact of the Covid-19 pandemic. These were the reasons given by nearly sixty percent of Singaporeans that applied for personal loans. Personal loans can be helpful to Singaporeans with business ventures, living costs or in any emergency situations as personal loans can be approved within a week and in certain cases as quick as a day.

#1 Purpose of Loan

There are many pros and cons to consider when applying for a personal loan in Singapore. The eligibility for a Singaporean to apply for a personal loan is to be above 21 years of age and to have a minimum annual income of $30,000 for banks, and $20,000 for licensed moneylenders.

The first thing to consider is the purpose of applying for a personal loan. Some positive uses of a personal loan are paying medical bills, repairing household appliances, covering emergency costs and debt consolidation.

Meanwhile, taking up a personal loan for the purpose of extravagant weddings, luxury holidays and items are some purposes that are best to stay away from. Nevertheless, it is always advisable to take two steps back and thoroughly consider the purpose of the loan.

#2 Duration of the Loan

Most personal loans are used as a short term fix and this should be a factor when considering the duration of the loan, the interest rate and the amount that you are applying for. It is important to keep these factors in mind as it will subsequently impact our income, commitments and dues. The duration should be carefully considered when applying as it could have a large financial impact in the future which is why you are always advised to consult with a financial consultant before making a decision.

#3 Best Time to Apply Loan

When is the best time to apply for a personal loan in Singapore? You should factor your current financial position, your credit history and your credit score. All these factors will play a part in deciding whether you can get the full amount that you applied for. Other than those factors, you need to look at what the money from the personal loan is going to be used for such as medical emergencies, daily necessities or for business.

Other than these factors, the economy of the country also plays a big part as the interest rate and the availability of personal loans will vary depending on the situation of the country. If the economy of the country is bad, the interest rate will increase and the availability of personal loans will decrease and vice versa if the economy of the country is stable.

#4 Interest Rates

The next thing that you should consider is the interest rates of personal loans. Personal loans in Singapore are known for having high interest rates because it is an unsecured loan and it is not bonded to any collateral and any other of your physical possessions such as your car or house are not at risk.

There are many options of organizations that we can apply personal loans from and we should consider all options as some may have a lower interest rate compared to others and some organizations also offer discounts and promotions such as not needing to pay the first 3 months of interest rates when applying for a loan.

Other than the interest rates and promotions that come when applying for personal loans, we should also consider the hidden costs such as report costs, appraisal fees and administration fees.

#5 Repayment Period

The repayment term of your personal loan shouldn’t be long term as the total amount of the interest rates will increase if the repayment term is longer. Other than the repayment term, you can also adjust the repayment amount and arrange for yourself to pay a larger amount on a monthly basis to reduce the repayment term of your personal loan. You should also avoid late payments as the penalty will ultimately end up increasing the repayment amount of your personal loan.

#6 Credit Score and Financial Situation

The main factor that you should consider is your credit score and your current financial situation as this plays the biggest part when applying for a personal loan. Taking personal loans will help in increasing your credit score if you are able to pay back your loans on time. This will help for your personal loans to be approved in the future because of your positive credit score.

A positive credit score helps you bring trust between yourself and financial organizations as these organizations will approve your loans based on your credit score. A lot of Singaporeans have bad credit scores because they have never applied for a loan or because they have proven that they are not capable of paying back their loans and taking a personal loan which is a short term loan can be an easier way of increasing your credit score.

Other than considering how a personal loan will affect your credit score, you should also consider your current financial situation and we should make sure we meet all criteria such as having the minimum annual salary requirements and that you have a fixed income to make sure that you are capable of paying the loan back on time.

#7 Consider Other Options

Other than applying for personal loans, we should also consider other options as it may have a negative impact on your credit score if you don’t manage to pay back your loan payments on time. Other options that you can consider is to borrow money from family and friends as this will not have an impact on your credit score and you are borrowing money from people who trust you.

In conclusion, there are many factors that come into play when you apply for a personal loan that could have a positive or negative impact for yourself when applying for credit loans in the future.

Undoubtedly, the Covid-19 pandemic opened a Pandora’s box of economic and financial problems that impacted economic growth and threatened livelihoods. As the pandemic rampages on, triggering further pay cuts, and job losses, it is only natural for some people to turn to personal loans to pay their dues or to keep their business open. In fact, borrowing money has been proven to offer a number of benefits, such as tax benefits as well as teaching borrowers money management skills. The real question is, however, where can we apply for a personal loan in Singapore? So, get comfortable as we share with you several avenues to apply personal loans from, and how they compare:

Banks

Naturally, banks are the common go-to sources for personal loans as they are bounded by the law, governed by, and operating according to legal standards. In fact, banks are known to lighten borrowers’ financial woes through personal loans, as such a loan will enable applicants to use the money for personal matters such as paying for their children’s education. More than that, banks have also enabled entrepreneurs to kickstart and build their business that contributed in the facilitation of economic activity.

Evidently, though, disadvantages of borrowing from banks do exist. One of the major downsides of applying for personal loans with banks is that the applicant needs to have a high credit rating, on top of having a minimum annual income of SGD20,000. Even if the bank approves the personal loan, it will subsequently impact the borrowers’ credit ratings, especially when repayments are delayed or defaulting personal loans. This, in turn, will impede future borrowing possibilities as well as chances of getting favourable rates in the future.

With such risks, it is no wonder that some are hesitant to turn to banks for financial aid. Thankfully, they are not the sole legal avenue when applying for loans in Singapore.

Licensed moneylenders

While banks typically extend loans to Singaporeans and permanent residents (PR) who bank in an annual income of at least SGD20,000 coupled with a good credit rating, licensed moneylenders are more likely to approve personal loans, even with a less-than-stellar credit rating. This is due to the fact that licensed moneylenders offer a more flexible loan amount. Additionally, licensed moneylenders in Singapore are registered under the Registrar of Moneylenders. This entails that licensed moneylenders are legally required to adhere to the interest rates, the type of fees they can charge, as well as maximum amount they can lend to borrowers that have been stipulated by the Registrar.

Speaking of legal outlines, borrowing money from licensed moneylenders will guarantee borrowers a harassment-free repayment period as they are legally required to adhere to the strict rules that have been outlined by law. Therefore, licensed moneylenders will do their utmost best to ensure a legal, safe, and secure loan process on top of offering expert advice on how to manage your finances properly as well as repayment plans that are tailored to fit every borrower’s financial situation.

There is no denying that applying for loans from licensed moneylenders is convenient with a simple application process. However, unscrupulous individuals, such as illegal moneylenders, are notorious for using the license numbers of registered moneylenders to trick woeful borrowers to fall for their scam. Speaking of loan sharks…

Illegal lenders

It cannot be denied that, for some, illegal lenders represent a viable channel for borrowing money, and speed and convenience are some factors why some turn to such sources, like loan sharks or “ah longs”, when they apply for personal loans in Singapore. However, what often slipped the minds of many are the risks involved that make illegal lenders an avenue that should never be considered. First and foremost, it should go without saying that borrowing money from illegal lenders is, well, illegal! Then, there is the fact that loan sharks charge high penalty fees, high repayment amounts in a short period, which will contribute to high stress levels and pressure experienced by the borrowers.

What sets loan sharks apart from licensed moneylenders is the manner in which they conduct their business. While banks and moneylenders are legally obligated to adhere to the law, standards, and requirements that have been outlined by regulatory bodies, and the government, loan sharks often resort to harassment, intimidation, and threats. In worst case scenarios, loan sharks turn to illegal means or violence to recover the debt.

In fact, Channel News Asia reported that illegal lenders have resorted to aggressive tactics to push forward their loansharking activities, especially when the pandemic is still at large. To top it all off, Neighbourhood Police Centers indicated that loan shark harassment cases negatively impact a residential area’s value as well as threaten the safety of the neighbourhood. Therefore, it needs to be emphasised that borrowing money from loan sharks pose a threat to our families, and potentially our neighbour.

With that thought in mind, it is monumentally important for potential borrowers to check with the Registrar of Moneylenders in Singapore to ensure that the moneylenders are licensed and registered. One of the tell-tale signs of a loan shark include doing business without a contract; operating without a legal license number or an office; and offering huge amounts of money to lend.