The overall development of your family’s financial situation will often be intertwined with the monetary resources you have at hand. Singapore is a rich and well-developed country, but it’s also an expensive place to live in, where hidden expenses can sometimes affect the stability of our day-to-day conditions.
Comparing the personal loans available in Singapore is important because not all loans benefit from the same repayment structures, and not all private lenders are as lenient when it comes to the eligibility criteria of the commercialised loan packages or with the interest rates associated with the credits. In our country, borrowers who contract the services of private lenders and conventional banking institutions are legally protected against predatory interest fees, or supplementary add-ons on top of already-existing fees. But not all loans are the same, and not all lenders operate in a similar manner.
Comparing the personal loans available in Singapore is crucial, as the total borrowing costs for similar loan packages can vary significantly between lenders. Yes, the maximum interest rate set via the Moneylenders Act will be the same between lending agencies. But what about the minimum one? How about the repayment tenure, or the impact on your credit score? Comparing the personal loans available in our country is not just a recommendation. It’s pretty much necessary in order to find the best deal for your family.
Join The European Business Briefing
New subscribers this quarter are entered into a draw to win a Rolex Submariner. Join 40,000+ founders, investors and executives who read EBM every day.
SubscribeWhy Choose a Personal Loan?
That’s a question only you can truly answer. Yes, Singapore is one of the world’s wealthiest countries. That said, it’s also a place in which income inequality is something of an issue, and a country in which rental prices have risen significantly in the last couple of years. Whether we like to hear it or not, a significant percentage of the SG population doesn’t currently have enough savings to navigate a temporary financial crisis without inquiring about external monetary help.
Comparing the personal loans available in our country is important, as a personal loan represents a way to consolidate your existing debt into a single, easier to administer payment; handle emergency large-scale expenses that have dried up your savings, as well as finance major purchases, that in the future might bring you a positive return on investment.
While not exactly a rule set in stone, a personal loan might offer lower effective interest rates than credit card debt, and it can also give you more flexibility when it comes to cash flow. Plus, personal unsecured loans are easier to obtain compared to other types of credit packages; they have no real restrictions when it comes to how you can spend your money, and they are protected under the framework laid out in the Moneylenders Act.
How Much Can You Borrow with a Personal Loan?
As per the limitations laid out on the Ministry of Law website, the maximum sum you are legally able to borrow in SG, via an unsecured personal loan will be dependent on your annual income. Technically, there is no minimum income required in order to obtain a sum that’s no larger than $3,000. Are you a citizen or permanent resident of SG and you earn less than $10,000? In that case, strictly from a legal standpoint, you are permitted to borrow up to $3,000. Are you a foreigner? Then that sum is downscaled to $500.
But in reality, this is more of a technical issue. In the real world, most private lenders in our country will need you to earn at least $20,000 per year in order to obtain an unsecured personal loan. Why $20,000? That’s the threshold necessary in order to qualify for borrowing six times your monthly wage. So, at $20,000 per year, you will technically be allowed to borrow $10,000.
However, this only applies to unsecured sums. Do you need a personal loan that can provide you with more cash? Are you looking to invest in an urgent business opportunity, or do you plan to purchase a product or a service that, while expensive now, might provide you with a positive ROI in the near future? In that case, you could secure the loan application with tangible guarantees. Collateral-based loans are not limited by the same income thresholds as unsecured ones, and therefore are a suitable choice if you need fast money, with advantageous interest rates and no supplementary questions asked.
Why Get It from a Private Lender?
The number one reason for considering a private lender over a conventional banking institution is the faster approval of the application and the same-day disbursement of the funds. If you are applying for a personal, unsecured loan, you do so because you need money fast and you don’t want to go through an involved application analysis process that could take weeks to finalise.
With private lenders, things are just easy. The loan application process can be done online, the review of the attached documentation will happen, typically, in under 24 hours, and if approved, the money will be disbursed on the spot, once the contract is signed. There is no fuss, there are no extra questions, there are no hurdles. Sure, not every application is approved, and the lender will still need to see proof of your residency, income, and past financial data. But overall, obtaining a loan from a private lender is simply easier.
Moreover, the eligibility conditions of the loan can be more advantageous. Not only is approval for private lenders’ loans quicker to obtain, but the loans themselves are often more accessible than what you can find in the catalogue of conventional banking institutions. Banks have stricter lending criteria when it comes to minimum income, attached documentation and employment history. Meanwhile, private lenders are often more flexible and should have no problem collaborating with self-employed individuals or with people with less-than-ideal credit scores. It’s all about flexibility, really, and obtaining a personal loan that works in your favour.
