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Taking loans is a common practice, especially in Singapore – we all feel the need to get a loan at one point or another. However, the real question is choosing where to take the loan from or which provider to approach. Bank loans are very popular among most Singaporeans, but do you know there are other institutions that you can approach to get a loan?
Even though not as popular, non-bank personal loans have many benefits for borrowers. Not only are their eligibility requirements lower, you can also obtain cash faster. Let’s learn more about them.
1. What are Personal Loans?
In Singapore, personal loans are commonly understood as unsecured loans, though lenders can request for security if the amounts are large. You can approach licensed money lenders for these personal loans. Unlicensed money lenders – known as the loan sharks are illegal.
2. How are Personal Loans Different from Bank Loans?
Getting loans from banks is a common practice in Singapore, but the biggest difference between bank loans and personal loans is that banks do more comprehensive background credit checks. This can be a huge disadvantage for people with poor credit. In comparison, personal loan institutions can give approvals for loans as fast as within the hour. For having more lenient loan approval, personal loan providers usually charge a higher interest rate than that of banks.
3. Who Should Go for Personal Loans?
Personal loans are for applicants who are at least 21 years old, must be a citizen or permanent resident of Singapore and are employed, or have a recurrent stream of income. Personal loan institutions do not require a long list of documents to process your loan, unlike banks.
4. Types of Loans
In Singapore, you can find many different types of loans considering their common terms – such as:
Short Term Loans
These are loans that come with a shorter repayment period – mostly less than a year. These are the ideal type of loans for people or businesses who cannot qualify for a credit line.
Instant Cash Loan
As the name suggests, instant cash loan is approved and given to the borrower as soon one apply for it. This loan is taken against your salary so you can pay it back with your next pay cheque, but it comes with a higher interest rate. This makes it an ideal type of loan for people in a financial emergency – you only need to show your proof of income because your credit score is irrelevant here.
Personal Loan
The most popular type of loan in the country. You can get up to 6 times your income and the loan comes with a fixed interest rate. Repayments are based on equal monthly payments but you have the option for early repayment.
Long Term Loan
This type of loan comes with longer repayment tenures – usually longer than a year. It is ideal for people or businesses who are looking to purchase equipment, assets, or inventories. You can get a longer repayment period at a fixed interest rate, depending on your lender.
Weekly Loan
This can be in the form of personal loan or long term loan – and they can be secured or unsecured; you only need to guarantee that you will be able to make weekly repayments. Your credit report is not relevant here. However, you must have a loan guarantor – an organization or person who can guarantee your repayment.
5. Advantages of Getting Personal Loans
Fixed Interest Rate
Personal loan offers fixed interest rate that does not fluctuate. This makes them easy to calculate.
Faster Processing
Personal loan offers a much faster and simpler application process compared to a bank. As mentioned above, you are not required to fulfill a long list of documents or go through tedious paperwork. In fact, in most cases, you also don’t have to show your credit score, and most money lenders can even process your loan request within a few hours. This makes them an easier and quicker option for emergency financial relief.
Loan Limits are Higher
Most licensed and legal money lenders can offer up to 6 times your monthly income – which is not easy to attain through a bank loan without showing a good credit score. However, you will still need to show proof of income.
6. Finding the Right Lender
Now that we have established that personal loans are much easier to go for, it is important to understand how to find a legal and reliable lender. Here are a few ways you can determine the trustworthiness and credibility of your lender:
Licensed moneylenders will not contact you
A licensed moneylender is not allowed to make any cold calls or send any unsolicited text messages to you.
Has a physical address
A licensed moneylender is obliged under law to verify your identity and particulars at its approved place of business. The licensed moneylender cannot approve or grant a loan to you remotely.
No payment of fees will be asked before the disbursement of the loan
A licensed moneylender will not ask you to make any payment before the disbursement of the loan, or to make any payment to secure the disbursement of the loan. This includes GST, “admin fee”, “processing fee”, or any other fees. An administrative fee may be charged by the licensed moneylender after the loan has been granted, but this will usually be deducted from the loan principal that is disbursed to you.
Has a Loan Contact
Having a loan contract prepared is important and requires the signatures of both the parties involved. Make sure your loan contract includes the following:
- Loan amount
- Late payment penalties
- Repayment period
- Repayment options
- The interest rate not exceeding 4% a month
Moreover, make sure they will only charge the following fees:
- Upfront service fee of up to 10% of loan amount
- Late payment fee of $60
Get a Loan from ValueMax
Personal loans is one of the options for meeting cash needs in Singapore. Whenever in need of financial assistance, you can apply from a licensed moneylender such as ValueMax and be rest assured that their business is governed by the Ministry of Law. Your rights and well-being is hence protected. Reliable and trustworthy, ValueMax offers a variety of loans to best suit your needs!
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