What is a Personal Loan? Personal loans can be defined as "unsecured debt" or not backed up by collateral. "Collateral" is when you have something that is value like a car or home that the lender can repossess if you don't repay any of the capital borrowed from the lender.
Having a personal loan can be used for essentially about anything, you can use it to fund a medical emergency, assist in handling your dream wedding or just need a family vacation. A personal loan can also be used for advancing your cash flow to get past any short term financial emergency.
Be cautious about not using a personal loan for home renovations, education purposes, or any car financing because many banks or lenders have specific accommodations for such matters.
How Much Money Can I Get From A Personal Loan?
Honestly, you can acquire anywhere from 2-6 times your monthly allowance up to a culmination of $200,000. Although the exact amount you can borrow depends on your credit history and other present credit facilities.
How Do You Qualify For A Personal Loan?
In Singapore, many banks and lenders offer personal loans but the requirements may vary. Here are some basic eligibility criteria that you will need to meet when you apply for a personal loan in Singapore. Singaporeans, permanent residents, and foreigners may all apply for a personal loan, but the requirements are different for each level.
Age of the Applicant
When you apply for a loan you should be 21 years of age, although some banks might offer loans to the age of 18 most banks do not accept anyone under 21 years old or above 60 years.
Most banks in Singapore will require that you have a minimal annual income of $20,000 or more if you a citizen or a permanent resident of Singapore and $40,000 or more if you are a foreigner working in Singapore with valid credentials.
Most banks and financial services in Singapore offer personal loans to foreigners working in Singapore along with local and permanent residents. But there are however a few moneylenders or banks that only offer personal loans to Singaporeans or permanent residents.
Relationship With The Bank
Some banks are more than likely to offer personal loans to candidates who already have saving accounts, credit cards, or other applicable services with the bank. The trust between the bank and its customers is important because the bank is more likely to offer personal loans to those customers already.
Salaried professionals, self-employed individuals, contract workers, temporary workers, and businessmen can apply for a loan and get the financial support they need.
Two Kinds Of Personal Loans
What Is The Difference Between A Term Loan and Revolving Loan?
Term loans come with a set period of time as well as established monthly installment payments. The interest rates for term loans are lower but banks may also charge a "processing fee" after supporting the loan.
A revolving loan is sometimes referred to as a personal line of credit. Just like a credit card, you can use it anytime, anywhere up to your credit limit but each month you only need to pay the minimum requirement of 2.5% or $50, whichever is higher. Because of a revolving loan and its high level of flexibility, the interest rate can be 3-5 times as higher than a term loan.
How Long Can A Personal Loan Last You?
Revolving loans should be used as an absolute last option because they have such high interest rates they should only be used in an emergency. Do not be looking for a long term repayment for a revolving loan.
Term loans can extend from 1 to 7 years. The longer the term, the lower your monthly payments but this will come with high interest.
How Can I Increase My Eligibility For Receiving A Personal Loan In Singapore?
Having a good credit score will help increase your chances of receiving a personal loan. Another important factor is to have a steady income so that the banks will consider you dependable and will more likely to offer you the personal loan you want. Please make sure you don't have any unpaid debt as it will lower your chances of receiving a personal loan.
So What Is Interest Rate?
Banks and financial institutions know you're not spending your money aimlessly and they will try to mix in words like Effective Interest Rate (EIR) and Applied Interest Rate (AIR). So which one should you be looking at when applying for a loan? The Applied Interest Rate (AIR) will appear lower and is used for advertisement purposes to attract your attention. Be wise and avoid this trap. The Effective Interest Rate (EIR) is what you need to be aware of and a bank will be upfront about what it includes. A lower Effective Interest Rate should not be the individual determining part for applying for a loan. Most banks will offer lower interest rates for longer securities but don't be tricked out of your treat the amount of interest you end up paying is still higher.
In conclusion, a personal loan is a great investment but these quick facts will help you choose the right resolution to invest your money to benefit you the most.