There are many loan options and types of lenders that you can find to get a legal loan in Singapore but without the proper research and consideration, you could find yourself applying for a loan that is way above your budget. Getting the best loan in Singapore would require you to assess your financial situation, plan for the long-term and shop around before settling on your loan and lender of choice. Rushing into a loan application is never a good choice so doing the groundwork before diving in is vital in getting the best bang for your buck. Here are four tips to follow to get the best loan in Singapore.
1. Consider the Sum You Need and the Duration of the Loan
Before looking up the different interest rates lenders offer, you first have to decide how much money you need and the duration of the loan repayment as these factors will affect the overall charges of your application. To find the best loans that cater to your situation, figure out your needs and the reason for getting a loan. If you’re looking for a bigger loan sum for a significant purchase such as buying a home, these loans are usually long-term. A long-term loan means that you will be able to pay off your debt over a period of a few years, reducing your monthly repayment into smaller sums and making it more manageable to handle. This option is a great way of getting larger legal loans in Singapore compared to a credit card loan as those have insanely high-interest rates. However, do not extend your loan for too long as this would incur more interest charges.
If you are looking for urgent cash that is usually smaller in sum, do not take a long-term loan that forces you to loan out more than you need. Instead, find lenders that will be able to give you your loan quickly without having to extend your repayment time over a few years. These short-term loans are also a great way to get loans in Singapore as they usually do not access your finances and credit score before paying out the cash you need. You can receive your loan in under an hour if you opt for a short-term loan!
2. Check Your Credit Score
Many loans in Singapore, especially secured ones, will require you to have a good credit score so be sure to look yours up before applying for a loan. Credit scores are an assessment of your past financial histories such as existing debt amounts, your repayment history, and late payments. Using this score, certain lenders may choose to accept or reject your application. If you do not have a good credit history, it is almost impossible to get a secured loan. Having a good credit score is an added advantage especially if you are planning for a bigger loan. It can also have benefits such as waived fees and quicker approvals for the best loans you need.
However, If you have a low credit score it does not immediately mean that you are not eligible for a loan. Licensed moneylenders are more lenient when it comes to unsecured loans and will still offer a small loan to those with a bad credit history. Learn more about how to get a Personal loan with a bad credit score here.
3. Find Out Which Lender Is a Better Option for You
When getting a legal loan in Singapore, your two best options are a bank and a licensed moneylender. You should always stay away from illegal lenders or loan sharks as these options can result in irreversible consequences. You can look up the list of licensed moneylenders on the Singapore Registry of Moneylender website.
Banks and licensed moneylenders are safer options as they are permitted to draw up the necessary documents before granting an application. When choosing between a bank and a licensed moneylender, getting the best loan in Singapore comes down to your loan amount, urgency and eligibility. For a larger loan, banks are a better option but they also do a thorough check on your credit history and also require collateral declaration for secured loans, such as a home. Licensed moneylenders can provide smaller loans for those who do not have the capacity to wait a few days or have a low credit score.
4. Enquire as Much as You Can
Doing online research is always a great start but contacting the prospective lenders you are considering is always better. Make as many inquiries as you need before applying for a personal loan in Singapore but don’t rush into an application. Sending in more applications does not mean a higher chance of getting approved. On the contrary, it can actually prevent you from getting a loan.