An installment loan refers to the type of loan that you need to pay back in installments including the principal amount and the interest. It is considered a general term for both commercial and personal loan Singapore. More often than not, repayment is done on a per month basis.
Some of the common variables used for loan payment are the term of the loan, loan amount, and the interest rate. Some examples of monthly loans are mortgage loans, auto loans, and personal loans Singapore.
How does it work?
In taking out a monthly repayment loan, you have to fill out an application form with a financial institution or lending firm. It is important to specify the purpose of your loan and once you have completed the form, the lender will discuss the available options for you. Information like the term of the loan, monthly repayment schedule, payment of the loan amount, and downpayment will also be explained so you will know the terms and conditions of your loan.
So for instance, you borrowed $15,000 to finance a home renovation, the lender will inform you that a higher down payment will make you eligible for a much lower interest rate. Another arrangement that can qualify you for a lower interest rate is when you take out a loan for a much longer-term. Before you will be granted a loan, the lender needs to evaluate your credit standing, your monthly income or salary and other sources on how you can pay back the loan.
After reviewing your creditworthiness, the lender will determine the loan amount you are allowed to borrow and the loan terms associated with it. As much as possible, you should consider paying off your loan before the due date so you can save on interest charges. However, you need to ask your lender regarding paying off the loan amount early as you might incur prepayment penalties.
Apart from the principal amount, the borrower needs to pay other fees as well. Some of the charges that you need to pay are the processing fees, late payment fees, and loan origination fees. It is important that you ask questions before you agree with the terms so there are no grey areas.
There are three types of Installment Loans
1. Personal loan in Singapore
Installment loans that you can use for consolidating debt, paying off bills, or financing a major purchase. This type of loan needs to be repaid within 1 to 10 years (banks) up to 1 year (moneylenders) Subject to the terms and conditions of the agreement. Since this loan does not require collateral, the interest rate can be higher than auto loans and mortgages.
2. Auto Loans
As what the name implies, this installment loan is intended for purchasing a car. With this loan, you will need to repay the amount you borrowed within 1 to 10 years. You will also need to keep in mind that the duration of monthly payments may vary. Longer repayment terms have a lower interest rate while loans with shorter repayment come with higher interest rates.
Mortgages are ideal for those who want to purchase a house. It has a longer repayment duration. Borrowers need to repay the loan within 15 to 30 years. With this installment loan, the interest rate is fixed and the payment per month does not change.
Requirement & Eligibility for an Employee
Before your loan application will be approved, the lender needs to check that you have complied with their basic requirements. Borrowers have to be at least 18 years of age to qualify for monthly repayment loans. If you are employed, you have to be a regular employee with a fixed monthly income as it is one of the factors that will determine your ability to pay back the loan amount you borrowed.
The lender will also check your credit standing. If you have a good credit score, the lender is more likely to grant you the loan amount with a lower interest rate. You will also have attractive loan terms if you do not have any bad credit history.
Requirement & Eligibility for a Self Employed
The installment loan is not only for the employed but self-employed as well. However, just like any type of loan, you will need to meet the minimum requirements to apply. For self-employed, you have to be at least 18 years old to qualify. It is also important that you show your source of fixed monthly income as proof that you can repay the money owed per month.
Benefit from Taking Monthly Installment Loan
Many people prefer installment loans because of the number of benefits that it provides. We listed the benefits such as:
1. Larger Borrowing Limit
Among the best things about installment loans Singapore is that it has a higher borrowing limit. Not only that, but it also has a more extended repayment schedule, which you cannot get from banks. This is considered as an advantage, especially in times of emergency and you need to apply for a loan with guaranteed fast approval. With the higher borrowing limit, you can also remove the possibility of taking out multiple loans to get the quick cash fast.
2. Hassle-free Application
Applying for installment loans can be done online or walk-in. You will be scheduled for an in-person meeting when your application has been approved and when you need to discuss and sign the contract. If you choose to apply online, your application can be approved right away as long as you have completed your application requirements. Moneylenders’ approval time can be as fast as 30 minutes. Banks, on the other hand, may take from a few days to a few weeks.
3. Quicker Approval
Lenders can perform a quick credit check so you do not have to wait for weeks for their verdict. Once you have submitted the requirements, the lender will approve your loan. Aside from quick cash, you will also be offered more flexible repayment terms than other types of loans. Taking out a loan from banks will take time because you will need to submit a ton of requirements and also go through a series of background checks.
It is also difficult to get approval if you have bad credit standing because this is among the criteria that you have to meet. You will also have to present proof that you can repay the money you borrowed. If you are in dire need of cash, bank loans may not be a reliable option.
4. Higher Approval Rate
One of the things that deter borrowers from applying loans is having a poor credit score. With monthly installment loans Singapore, you will be able to borrow a larger loan amount because the lender does not focus solely on your credit score. While it is still a requirement, lenders do not base their decision on your credit rating. The deciding factor also includes proof of billing, payslips and many others.
5. Convenient Application Process
Traditional lenders and banks have standard business hours. This means that you have to submit your application within the hours of operation. With installment loans, you can apply any time of the day as they are available 24/7. With the round the clock services they offer, you can have access to quick cash when you need it.
6. Affordable Repayment Terms
Some loans will require you to pay the amount you borrowed in one go. An installment loan has more flexible repayment terms. You can pay in reasonable amounts of cash so you can manage your finances.
Why take monthly installment loan from Licensed Money Lender vs Bank
These days, borrowers can take advantage of loans that offer installment systems. A monthly installment loan Singapore that a licensed moneylender provides can give you peace of mind because you are assured that you are given the right payment plans and comprehensive terms and conditions. A licensed moneylender has relatively lower interest rates compared to banks.
The interest rate is also fixed and will not increase in the future. Compared to banks, a licensed moneylender will reduce the pressure on you when it comes to repaying the money you borrowed. With the option to pay within your ability, you can gradually reduce your debt.
A licensed money lender in Singapore is also transparent when it comes to their payment terms. You will be given a loan plan suitable to your needs. Banks also have higher interest rates that will accumulate if you do not adhere to the repayment schedule.
How to find the best moneylenders that offer monthly loan
The Internet can give you many options for monthly installment loans. However, lenders are not created equal and while some of them will extend help to those who are in need, high-interest rates, and shorter repayment terms can wreak havoc on your finances. It is best to do your own research so you will know whether or not you are getting the best deal.
Among the factors that you have to take into consideration when searching for a moneylender is their license. When a moneylender is licensed, you can be sure that all transactions are made in good faith. There will be no hidden fees because everything will be explained to you.
Since it can be overwhelming to choose the best moneylender that will address your needs, deals coming from unlicensed lending companies should be avoided even though they have attractive offers. If it sounds too good to be true, then it definitely is. You will have to ask the right questions so you will know if you are getting a good monthly installment loan offer.
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