Getting a loan from a bank is a lengthy process. This makes going to a private money lender in Singapore a much more convenient option. Loans from money lenders have fast approvals and quick disbursements. This makes them ideal for urgent financial problems. You can use your fast loan to settle medical bills, settle some debts, or use for some other emergency.
Due to personal loans are unsecured loans, they attract more interest relative to car loans or home loans. As such, it is quite difficult to obtain personal loans from most lending institutions.
The nature of personal loans puts the money lender at a slight disadvantage. To secure their interests, the money lenders have certain requirements that you must meet to qualify for a loan. On the other hand, you as the borrower should check out the money lender. You have to make sure that the lender is licensed. You have to ensure that they are not charging you fees that are not legal.
If you are new to the borrowing game, these and other aspects are what you should look at before applying for a loan.
Tenure Of The Loan
Loan tenure refers to the length of time you are given to repay a loan. For banks, a personal loan has a tenure of at least 12 months. The idea behind this period of time is so that they can get the full interest they will charge you. Failure to pay up after the 12 months accrues more interest. Fully paying off the loan before the 12 months are up attracts sanction.
As such, going to a licensed money lender is a better option. They offer unsecured loans at low-interest rates, as set by the government. If you miss a repayment, you are charged interest on the late payment. Also, if what you have in mind is a short-term loan, a private money lender in Singapore is the best for your type of situation.
Some money lenders advertise an interest rate on their website. Those published rates tend to differ from the actual rates they charge. If you have an annual income that is less than S$30,000 your interest should be calculated with the Normal Interest Rate. This means that you are charged a maximum of 4% interest on your loan. This is on a monthly basis.
Some lending institutions calculate interest using the Effective Interest Rate (EIR). This refers to the real interest you are to pay for borrowing money from them. With the Effective Interest Rate, you could be charged interest anywhere between 20% – 40%. Before you borrow money from any one money lender, compare their interest rates first.
Always ensure that you check the advertised interest rates against the actual interest they charge. Some lending sites may have an EIR that is more than the published rate. This is because the EIR is calculated at a compound rate. For private money lender in Singapore, you shouldn’t get an interest rate more than 4% per month.
Fees And Terms
Apart from the interest, you are charged, there are other fees you will be required to pay. These charges include:
- Administrative fees
- Processing fees
- Cancellation fees
- Loan origination fees
- Late repayment charges
- Default Fees
- Prepayment Fees
These fees and charges should be stated in the terms and conditions prepared by the lending institution. Request for them to work out the fees that applies to you. Make sure you read the terms and conditions thoroughly before signing anything. The terms and conditions are a binding contract once you sign. Signing the contract means that you accept the terms and all fees applicable to you.
If you apply for a loan at a bank, they will request your credit report. This request will go to Credit Bureau Singapore, who keeps all your credit information on file. If your loan application is a private money lender in Singapore, your credit information will come from the Moneylenders Credit Bureau.
All the details on moneylending activities can be found on the Moneylenders Credit Bureau. These activities include loan repayment documentation and applications, amongst others. As long as these details are with licensed money lenders in Singapore, the Bureau will have it.
Your credit history isn’t the only thing that determines your eligibility for a loan. Other requirements include:
For A Private Money Lender In Singapore, Singaporeans Should Have
- 18 years of age and above
- Your NRIC
- A recent payslip, or proof of employment that is no older than three months
- Evidence of tenancy, which could be a letter addressed to your residence. It must include your full name and address.
- Bank statement of the account into which your salary is paid. It must not be older than 3 months
- Your SingPass token. You will need to login to HDB or CPF for authentication
- A valid passport
- Contract of Employment
- A recent payslip, no older than three months
- A work permit or Employment pass
- Proof of tenancy or residency, which could be a letter addressed to the house
- A recent bank statement, no older than three months
The Loan Amount You Are Eligible For Depends On Your Annual Income
- If you earn S$30,000 – S$120,000, you can borrow between S$20,000 and S$30,000
- If you earn S$20,000, you can borrow S$3000
Eligibility Requirements For Banks
- S$30,000 annual income
- CPF statement for 12 months past (if you are employed and earn a salary)
- Your Income Tax Notice of Assessment for 2 years past
- Three-month-old bank statement if you are self-employed
- A photocopy of your NRIC
- S$42,000 annual income
- Most recent Income Tax Notice of Assessment
- Most recent pay slip. Must be printed and original
- Back and front photocopies of your passport
- Back and front photocopies of your employment pass
With this checklist, hopefully, it is much clearer to you if you are considering to seek out a money lender for a Personal Loan. If you do not have a particular money lender in mind, we have a list of the recommended best money lender in singapore with reviews for your considerations.