People take out personal loans for all sorts of reasons. Sometimes, it’s for emergency expenses like paying off an unexpected medical bill or vehicle repair bill. Other times, a loan may be instrumental in financing big-ticket spending such as a home refurbishment project or a dream wedding. Whatever the reason may be, everyone wants to get their hands on the lowest interest rate personal loan they possibly can.
As a matter of fact, a lower interest rate equals lower cost of borrowing. Where possible, anyone in need of an urgent personal loan would appreciate something that’s lighter on the wallet. Curious about how you can find the lowest interest rate personal loan in Singapore? Read on.
1. Build up a good credit history
Lower personal loan interest rates in Singapore are given to borrowers with a good credit history as it shows they’re responsible and will pay back a loan on time. Even if you don’t need a loan immediately, it’s good to work on your credit history for the sake of future loans that you may need.
You can start building your credit history by opening a credit card account. Note that debit cards do not add to your credit history as it isn’t a type of unsecured credit facility.
To ensure you’re on your way to building good credit history on your credit card account, you’ll need to be on top of repaying your bills. Use your credit card responsibly by (i) paying in full before the bill is due; (ii) refraining from defaulting payments; and (iii) avoiding maxing out your credit card limit.
If you use your credit card responsibly over time, you’ll have a higher chance of securing the cheapest personal loan in Singapore thanks to your good credit history!
2. Boost your credit score
A credit score is a 4-digit number ranging from 1000-2000. This number is derived from your credit history; a more desirable history can score you higher on the scale while a bad history will give you a score closer to 1000.
Why does your credit score matter? It’s pretty much the only factor that’s within your control and it’s linked to the interest rate lenders are willing to offer.
A solid credit score will be handy in earning you the lowest interest rate personal loan in Singapore — lenders reserve the most competitive interest rates for borrowers they deem responsible and reliable.
Apart from adopting good credit card habits, ensure you don’t default on your loan repayments. While you’re at it, always repay your bills and loan instalments on time before their due dates! Additionally, monitor your credit report for any mistakes or fraudulent activity. Be sure to check for errors and report any mistakes on your credit report.
You can check your current credit score by accessing your credit report on the Credit Bureau Singapore website.
3. Look out for personal loan promotions
If you’re wondering where to get a personal loan in Singapore with a low interest rate, you should definitely keep your eyes peeled for promotions that banks may run.
Banks typically run promotions like processing fee or annual fee waivers that help decrease your cost of borrowing. Some banks also offer promotional interest rates to borrowers with stellar credit scores. Long story short, it’s always an advantage to maintain a good credit history.
4. Take note of any extra charges that may apply
One way to get the cheapest personal loan in Singapore is to keep extra charges that come with your loan to a minimum.
Taking a loan comes with processing fees so you’ll want to shop around a loan with low to no administrative costs. Other charges include early termination fees, also known as cancellation fees or foreclosure charges.
You can also keep your interest rate charges to a minimum by paying on time as late repayments come with late interest charges as well as late payment charges.
5. Do a personal loan interest rate comparison
When buying a laptop, you’ll naturally shop around at different stores to find a laptop that can serve your needs at an affordable price. Shopping for a loan is the same. Enquire with different banks and financial institutions so you can do a personal loan interest rate comparison to find your best match.
Of course, the lower the interest rate, the lower your cost of borrowing but you’ll want to pay attention to the effective interest rate (EIR). For the uninitiated, EIR reflects the true cost of borrowing as it includes additional costs like administrative and transaction fees.
Just to put things into perspective, a loan can have a low advertised interest rate, but the extra charges may be a lot higher than the market rate. Don’t be fooled by what’s advertised! It’s up to you to do lots of research before settling on a loan that best suits your needs and budget.
Bottom line
Everyone wants the best bang for their buck but getting a favourable personal loan interest rate in Singapore boils down to having a good credit history and shopping around for good personal loan promotions. Compare personal loans here.
