How to choose the best personal loan in Singapore

How to choose the best personal loan in Singapore

Finding the best personal loan provider in Singapore can be hard, especially if you have no idea where to find one. Personal loans are very important since it allows you to get out of sticky financial problems, emergencies, and other instances in which you need to get a quick source of cash.

However, the lending company in which you will obtain the borrowed money is also important. After all, you will have to pay back the loan that you take out, and you will have an easier time settling your finances if you borrow from a reputable loan provider. For this reason, you should only get loans from the best personal loan providers in Singapore.

What is a personal loan?

A personal loan does not require collateral and has no restrictions on how you can use the funds. As such, personal loans are more flexible compared to other types of loans such as mortgages, car loans, etc. For example, you are only allowed to use a home mortgage loan in purchasing or funding a house. You cannot use any part of the loan for any other expenses.

If you need to borrow to fund multiple expenses like travel, wedding, emergencies, payment for other debts, renovation, or purchasing new gadgets, a personal loan is the best to take.

How does Personal Loan works?

Personal loans are a type of instalment loan. This means that the amount is paid in instalments, usually every month, until you fully pay back the borrowed money and its corresponding interest and/or fees. The tenure of personal loans usually varies from 1 year up to 7 years. After your loan is fully paid, your account will be closed and you will need to apply again in case you need more money.

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How to get the Best Personal Loan in Singapore?

There are three main kinds of financial institutions that let you get financial assistance: banks, moneylenders, and credit unions.

1. Banks

Getting approved for a bank can be hard since they tend to have strict requirements. Also, your application can take a long time to get approved, so borrowing from a bank for emergencies and other instances where you need to have the money available quickly is not recommended.

Having said that, taking a loan from a bank is very safe, and there are rarely any scams or debt traps. If time is not an important factor for your loan, taking a personal loan from a bank can be enticing.

2. Moneylenders

Moneylenders can be a good source of personal loans for whatever purpose you require. They have competitive interest rates. Also, they make the money available as soon as the loan is approved. Their loan approvals tend to be fast, depending on the moneylender, and the type of loan you are applying for. When taking a loan from a moneylender however, you should be cautious of doing business with a shady moneylender. There are predatory moneylenders that will make you take a debt trap, which is extremely hard to get out from.

3. Credit unions

Credit union loans are one of the least expensive loans to take. However, most of the competitive loans require you to be a member of the credit union before you are eligible to avail them. There are even some credit unions that do not offer loans to non-members. If you don’t want to apply for a credit union membership just to take a one-time personal loan, you are better off with the two other options discussed here.

Things to consider when getting a personal loan

In this section, we will discuss some things that you must check before taking a loan from a lending institution.

Lawyer checking legal document

1. Verify their license

Before taking out a personal loan from a lender, you should verify that they have the proper license and certification first. Also, you should check if their business is registered within the proper governing bodies, such as the Ministry of Singapore.

This is especially true with moneylenders since they have the most potential for fraud and predatory activities. Having said that, fraud and scams also take place in banks and credit unions. Unless the bank you are transacting with is a known bank, it is recommended that you always check licenses just to be sure.

Customer review satisfaction feedback survey concept

2. Check reviews on the internet

Checking up reviews are one of the best ways that you can learn about a company, and the same is true for loan providers. As such, it is always a good idea to check what other people have to say about their experience with a particular loan provider. You can always use Google search for finding reviews on a specific loan or company.

If you want a website that specifically caters to loan reviews, Loan Advisor is your friend. With Loan Advisor, you can compare different loan types from various loan providers, such as banks, lending companies, and more.

Where to use Personal Loan?

1. Debt consolidation

Consolidating multiple smaller loans with varying interest rates, terms and conditions, and repayment schedule into a single personal loan is always a good idea. It will save you a lot of time and stress. With debt consolidation, you will make your life easier with the repayments, you can also save money on interest rates if you obtain a personal loan with a lower interest rate than your existing debts

Kitchen remodel home improvement view

2. Shoulder the expenses home remodelling and other improvements

If you want to make improvements or remodel your home but currently don’t have enough funds to afford it, and you also don’t want to apply for a home equity loan, a personal mortgage is the best option. Whether you want to install new technology such as solar panels, want to add a new room, or remodel existing rooms, the costs can be shouldered by it.

Woman paying bill

3. Emergency expenses

Emergency expenses are unexpected. More often than not, you will have a hard time looking for money to pay for associated expenses if you don’t have enough savings. Hospital bills, funeral expenses, and other unexpected expenses can quickly add up to unimaginable amounts. If your expense is not covered by insurance, and your savings is not enough, this is your best bet to pay for the emergency.

4. Making a big purchase

Do you want to purchase a high-end computer but cannot save up enough money for it? Maybe it is too expensive for you, or it will take a long time to save up. Either way, borrowing to fund big purchases can be a good thing. You will get to enjoy using whatever you purchased with the money today, in exchange for paying interest rates and the money that you are supposed to save.

Alternative options to personal loans

If you want to learn about other options other than personal loans, here are some of them.

1. Payday Loan

Payday loans are short term that is known for having a small window for repayment and high-interest rates. The interest rate imposed on a payday loan borrower is largely dependent on their credit score and monthly income. 

If both of them are poor, you can expect to have a really high-interest rate. Payday loans are only recommended if you want to take a really short loan that has under a year of maturity.

2. Foreigner Loan

Basically speaking, a foreigner loan is offered to foreigners in a country. It is another variety of personal loans, but with the simple difference of being available to foreign individuals. Banks and other lending institutions might be hesitant to loan money to foreigners. 

This is because the credit score of foreigners is hard to obtain, if not impossible, so there is no good basis for determining the financial status of borrowers. Additionally, foreigners can leave the country anytime, and it can be hard to seek repayments if they are already back in their home country. 

As such, if you are a foreigner and having difficulties in being approved for a loan, a foreigner loan can be a good choice.

One of the most reliable money lender in Singapore is A1 Credit, providing flexible payment plans and low-interest rate loans. They also have a low-interest rate, and accept applications even from borrowers with a bad credit score.

You should be at least 18 years old when getting a loan from A1 Credit, with a maximum of 6x your monthly income if the loan you are applying for is unsecured. Depending on the qualification of the borrower, A1 Credit allows up to S$50,000 for personal loans.

Make sure to read the terms and conditions upon signing the contract. A1 Credit thoroughly explains this so you understand the loan amount, rates, fees, and other information. A1 Credit practices ethical money lending, with a great 24/7 customer support to boot. They are also compliant with the MinLaw, so you will rest assured that you are dealing with the best, legitimate and reputable money lender.

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