You’ve probably heard the saying that money can’t bring you happiness. Though to some extent it is true, nonetheless, money is still the means of exchange to buy day-to-day necessities. Without adequate funds, life becomes a struggle, and this eventually results in frustration.
To most people, money is the solution to live a normal life where all their needs are met. Thus, people find the necessary means to source money, even if they have to borrow.
Looking for places to get urgent cash, whether an online loan or a cash loan, can sometimes be rigorous, and even futile. This is because many organisations or agencies involved in lending out funds are skeptical of the people they lend money to.
In contrast to these financial institutions, a personal loan can assist you to cover your pressing expenses if you are in dire need of some cash, or if you’re looking for alternatives to help with your current debt, but hold a bad credit rating.
Before we explain whether you can apply for a personal loan with a bad credit score, let’s look at:
What is a Personal Loan?
A personal loan is an unsecured loan offered to people based on their personal income. It is provided by banks or non-banking institutions and is very common for those wanting to accommodate their current credit card debts or seek an additional source of funds to make up for their expenses such as rent, education, medical, and so on. Ranging from 1k to 50k, you can get a personal loan based on your financial eligibility. One of the benefits of getting a personal loan is that you can combine many credit card debts into a single, low-cost, monthly payment and some institutions offer lower interest rates than credit cards. This way, you have an opportunity to improve your credit score while frequently fulfilling your payments on time. When looking into a personal loan in Singapore, you can apply at the bank, a non-bank financial institution, or with a licensed moneylender. But the chances of your application being approved at the bank are slim. The reason is generally that a poor credit score lowers approval chances. In Singapore, you can get an approved personal loan despite bad credit history although this is not guaranteed because the approval process isn't always transparent. If you have found yourself in a situation where you need urgent cash, rest assured there are places that can lend you some funds. In order to access the lenders' money, there are some terms and conditions involved. It is imperative you consider the advantages and disadvantages of taking a loan before applying. Below is a list of options to get a personal loan.
Applying for a Personal Loan at the Bank
A bank will only accept a loan application if you show stability as a borrower or when you repay the loan payments as scheduled. But if you're incapable of repayment, the bank will decline the loan application. As a result, you may have to apply elsewhere such as a non-banking financial institution or with a licensed moneylender. One solution is to improve your credit ratings by applying for a smaller personal loan. If you manage to convince the bank, they may grant you this loan but, of course, with the conditions of not missing any scheduled payments or piling up late payment fees. Once you've shown your credibility, banks will be favourable to offer you better loans.
Seeking a Personal Loan at Non-Banking Institutions
The bank is not only the solution for you - there are other options readily available for you in Singapore. You can explore non-banking institutions such as Singapura Finance or Hong Leong Finance. With a wide range of loans, you may find a suitable loan that fits your needs. Similarly, these financial institutions rely on your credit account history and score to determine your risk as a borrower. But do note that they have different risk criteria, and as a borrower, you need to understand their conditions (such as a higher interest rate) and be clear about your expectations of the service you are seeking.
Approaching a Licensed Moneylender
If all these options are not favourable for you, don't feel discouraged yet! A good alternative is to approach a legal moneylender. There are many licensed moneylenders in Singapore who offer short-term cash loans. Although the interest rates of many institutions that lend money out are quite high, not all offer such a high-interest rate. Some of them offer low-interest rates of up to 2.5% and a flexible repayment term of up to a year. It varies as to which licensed moneylender you go for and the kind of credit history you possess. In all fairness, people would always choose a Singapore loan with the lowest interest rate. This is because loans with the lowest interest rate are considered the best loans, and thus, it is reasonable to choose a lower interest rate to avoid increasing your debt. The best-licensed moneylender should offer the lowest interest rate, be highly transparent, and offer the most flexible terms and conditions. Be smart in your financial planning by comparing the interest rates and loan packages to determine which option is best suited for your situation. When you receive a thumbs up on your personal loan application, do note that whichever institution you go for, you'll always need to make your payments in full and on time since you're trying to improve your credit ratings. Do not succumb to a deeper pit of debts, which is why it is mandatory for you to find ways to improve your bad credit score in the long run. A great place to start improving your credit score is to head over to Credit Counselling Singapore. You can also restructure your debts by taking up a Debt Consolidation Plan. Simply head to any banks like DBS or Hong Leong to know more about them. All in all, stick to your scheduled repayments and gradually improve your credit score over the months. Everything will work out just fine.