Due to increasing costs, more and more people find themselves in a spot to take out a loan. College education, housing costs, and standard of living are constantly becoming expensive and beyond the average salaried person’s reach. When you find yourself in a crunch for money, the most straightforward answer is to go to the bank and take out a personal loan. Getting approval for a loan from a bank is a time taking process. Any person taking out a loan from any bank in Singapore has to undergo a thorough credit check. Anyone with a history of bad credit will not get approved for a loan.
Find the best low interest rates personal loan
Before going into a bank to get a loan, you should consider a few loan plans and compare them to find the one which is the best fit for you. Whether or not you receive a personal loan depends on who you are, how much money you need, and the minimum period of time in which you will be able to repay it. Depending on these factors, you should compare all the loan plans available to you and narrow them down. The effective interest rate is more accurate than the personal loan interest rate in calculating the approximate spending to get a loan and pay it back. The effective interest rate takes into account not only the interest payment but also other fees like processing fee and loan repayment schedule.
Processing cost is one of the main hidden costs of taking a loan is the processing fee. If you are taking a loan of a hundred thousand dollars, you have to pay a processing fee of a thousand dollars, which is 1% of the principal amount. The processing cost is a very small proportion of the entire loan, but it does increase the cost of borrowing.
- If you are on the lookout for a significant amount of loan and cannot pay big monthly installments, you need to choose the longest loan tenure. But the longer the loan tenure, the larger you pay in interest. These loans often come with zero processing fees and have low rates of interest.
- If you are in urgent requirement of money, a few plans can guarantee fast approval but with a higher interest and effective interest rate. If you are already a member of the bank, you can get your loan approved in as little as one day.
- There are a few loan plans in Singapore where there is no fixed interest rate. After your application process through the Money smart portal, you will receive a personalized interest rate based on your credit history and risk profile. If you have an excellent credit history, you should opt for these loans.
- Many loan plans offer instant approval and fast cash disbursement. Such loans are also accompanied by high processing fees of two hundred to three hundred dollars and a high-interest rate.
- A few personal loans work by drawing on the limit of credit. This works only for someone having a line of credit or a credit card with the said bank. These loans often provide instant approval and charge a 1% processing fee.
- If you are an existing customer with a bank, you will probably receive a lower interest rate than a new customer. This difference in interest rates often encourages existing customers to take out a loan.
- A few plans are providing a 0% interest rate. But even though their interest rate is zero, they charge a higher proportion of processing fees. Usually, personal loans charge a processing fee of 1% of the loan amount, but these plans charge a processing fee, varying from 3.5% to 4.5%. The effective interest rates of these plans are also very high. Just because a plan offers zero interest rate does not mean it has a lower cost of borrowing.
- Term loans are loans where you receive a fixed sum of money with an interest rate, all of which is decided before receiving the money for the loan. Usually, these loans are paid back steadily over a few years. Term loans also charge a low rate of interest in between 3.5% to 4.5%
- A personal line of credit is a flexible repayment loan. If you have a line of credit or a credit card, a certain amount of money is already approved. You can take out either part of or all of the funds approved. But you have to pay it back within a very short span of time, or else you might be subjected to a very high rate of interest. So before taking out a personal line of credit, you must make sure you can afford to pay it back immediately.
To Sum It Up
Many people don’t receive approvals for personal loans from banks. In that case, you can always approach a moneylender who the Singapore Ministry of Law has licensed. Moneylenders lend you money despite a bad credit history and are legally obligated not to charge high-interest rates. Moneylenders also process loans much faster than any banks and don’t charge a termination fee for repaying the loan earlier. So many people find borrowing from a money lender to be more convenient. But before engaging with a moneylender, you must ensure that they are authentic and check money lender license. Engaging with a loan shark may cause you a lot of hassle and worries if you fail to repay on time.
On the other hand, licensed moneylenders are legally obligated to follow the rules while extracting payment. So it is always a safer decision to steer clear of the loan sharks. It is vital to make sure the contract you are signing has all the details of the loan interest rate and the time frame you have to repay. Personal loans and private loans are both excellent and viable options for Singaporeans seeking a loan.