How to Get the Lowest Interest Rate Personal Loan in Singapore?

How to Get the Lowest Interest Rate Personal Loan in Singapore?

COVID-19 has brought sweeping changes to the society with lockdowns, quarantine protocols, and social distancing being imposed. Movement is limited as the threat of contracting the disease remains, which has resulted in economies falling into financial crises of varying degrees. 

Not one person has been spared from experiencing the negative effects of the pandemic. Everyone is facing some money problems in the present. Knowing how to get personal loans in Singapore might be the only option for some to alleviate their current situation.

What Is A Personal Loan?

There are many ways to get funds during a financial crisis, but perhaps one of the quickest is through applying for personal loans in Singapore. A personal loan in Singapore is one type of unsecured loan wherein you can get the money fast without having to present collateral and still enjoy low-interest rates. These are the perfect options for those who find themselves in an emergency where they cannot afford to wait for long application processes.

Personal loans in Singapore are flexible, which means that you get handed the cash you need without any questions. The financial institution releasing the funds to you does not meddle with what you do to the money. As long as you qualify, you can sign their release forms and get a solution to your current issues. 

However, do remember that taking out personal loans comes with responsibilities, such as paying an effective interest rate (although there are options for getting low-interest rates) within the loan tenure. The following are guides to understanding and securing your personal loans Singapore.

What Are The Types of Personal Loans?

Before you decide to apply for loans in Singapore, it is necessary to become aware of the available types in the market. There are four types of personal loans that you can choose from. 

Make sure to carefully study how they work so you can choose what will work best for you. Important factors to consider include the effective interest rate, the processing fees, the total loan amount, and whether or not the loan is within your best personal interest.

1. Personal Installment Loan

The personal installment loan is the type your chosen credit institution gives you a certain sum of money. You can file for the loan, pay a one-time processing fee that ranges from $0 to 3% of your loan, and get your money, which will be repaid over an indicated period (usually 12 up to 60 months) with additions from the loan interest rate. 

These loans are usually for those in Singapore who need emergency funds to alleviate their current situations. Payments composed of the processing fees, loan amount, and corresponding interest rates, different for each credit institution but start at a minimum of 4% loan interest rate, are paid in equal monthly installments. 

You can get a loan of up to 4x your monthly income in Singapore, but the amount strongly depends on your personal account’s credit limit.  This loan amount can go up to 10x your monthly salary if you have an income of over $120,000 annually partnered with a best personal financial history. Remember that a good credit score is necessary when applying for a personal installment loan.

2. Line of Credit

Also, under personal loans is the line of credit, which charges interest rate only when you withdraw from your account. Certain sums are made available in your account as personal loans, and only the money you take out will be charged as loans.

 If you choose to repay the funds, no monthly interest rate will be added. Interest rates for this type of personal loan have the lowest monthly interest rate of 18% but can get up to an interest rate of 20% p.a. on top of you paying processing fees of $60-$120 annually to maintain your line.

Banks offer up to 2x your monthly salary for these types of personal loans, which can be increased to 4-6x when you get your loan in other financial institutions. There is no fixed tenure for the credit line, as you only pay the interest when you use your loan. 

You have to pay your annual processing fees to maintain your account. These funds serve as the last resort for people who need money urgently and could no longer afford to wait for a long loan approval process.

3. Funds Transfer or Balance Transfer

Abbreviated FT for Fund Transfer or BT for Balance Transfer, this type of loan utilizes your available annual or monthly balance and charges little to a low-interest rate for a period of 3 to 12 months after you have paid a one-time processing fee. 

When the tenure expires, the institution will ask you to either repay the remaining balance or be charged with 18% – 29% annual interest rates depending on their policy. FT or BT allows you to transfer the outstanding balance from your credit card to other accounts with a lower annual interest rate or no interest rate charges. This is helpful for those who need quick cash for an emergency.

BT charges processing fees of 1%-5%, which are even waived, serving as one-time processing payment. These loans can go for as low as $500, but when you have a good financial history while also earning a relatively higher annual income, it can go up to 10x your current monthly salary. Repayments should be made within 6 to 12 months after the release of your loan; otherwise, high annual interest rates will be charged.

4. Debt Consolidation Plan

For individuals 18 years old and above struggling to repay their debts from various financial institutions here in Singapore, the government has created a type of personal loan known as the debt consolidation plan, which can draft an annual payment plan. 

This scheme combines all your free debts and brings them under one umbrella to help you manage your bills easier. Interest rates range from 6.7% – 12% p.a. which are a lower annual interest rate compared to you separately paying your debts. A one-time processing fee will be charged when availing this type of personal loan, depending on the institution that you applied to.

A DCP applies to credit lines, cards, and personal loans where a new bank will take over repaying your balances, and you will repay them through a more disciplined annual schedule instead. You have to have an outstanding credit of at least 12x your monthly salary to qualify for a DCP. The loan tenure lasts from a year up to 10 years. 

This type of loan applies to those who have trouble keeping up with their annual repayments and need intervention to ensure that they do not fall into much larger debts.

How Do You Qualify For A Personal Loan?

Now that you have an overview of the different types of personal loans, with their corresponding processing fees and rate, it’s time to talk about how to qualify for one.

  •  Applicants must be 18 years old and above and should have a minimum salary of SGD 1,500 for locals or SGD 2 000 for foreigners. 
  • When applying, Residents have to bring the following:
    •  identity cards/NRIC
    •  proof of residence
    •  proof of employment
    •  SingPass
  • For Foreigners, they need to provide the following:
    •  Passport
    • a work permit / S-Pass / Employment Pass
    • proof of residence
    •  proof of employment
    •  proof of income
    •  SingPass

When To Apply For A Personal Loan?

As mentioned previously, you should consider applying for a personal loan when you need to have emergency funds to address a pressing issue. In these pandemic times, more and more people find themselves struggling in terms of finances, and some might have to consider getting a personal loan. 

For example, business owners who cannot continue their operations because of quarantine protocols but still have to pay utility bills might have to file for a loan. Another instance is when an individual contracts a certain disease requiring huge amounts of money for treatment.

Regardless of your current situation, you need not be afraid of taking out a personal loan. Singapore is home to many credited financial institutions that are more than willing to offer their services. 

However, there is an undeniable risk when applying for a personal loan. Therefore, you must conduct an extensive analysis of your options and take the time to understand loan policies so that your application until the repayment of your loan can be as smooth-sailing as possible.

What are the Things To Consider Before Applying For A Personal Loan?

To make the best decision in applying for a personal loan, you should be aware of certain considerations. Make sure that you understand the implications of these to secure your best and safest personal loan journey.

1. Have a Repayment Plan in Place

Many of the negative perceptions associated with taking loans can be traced to having a lack of repayment planning in place. It would help if you only considered taking a loan when it becomes an absolute necessity. 

Also, carefully consider and plan how you are supposed to repay the loan and its interests. This way, you can avoid getting into a vicious cycle of getting loan after loan due to piling debt.

2. A lower percentage Does Not Mean A Lower Interest.

Some loans are of the front-ended type, wherein you are paying for the loan amount that has an accompanying interest already charged. Thus, despite being faithful in repaying your debt, you pay for an amount that is much higher despite the loan promising you with a lower interest rate. 

This is why it is important to scrutinize the policies of a personal loan you consider before you file your application.

3. Avoid Applying For Successive Bank Transfers

Never rely on the power of the BT or bank transfer schemes. Yes, you can opt to apply for one when you realize that you cannot pay for your outstanding balance within the set period, but remember that BTs do not always get approved. 

There are various undisclosed reasons for disapproval of BT requests, such as exceeding your Total Debt Servicing Ratio. The message should be clear; however, do not rely on bank transfers but rather focus on responsibly repaying your loan installments.

How To Avoid Personal Loan Scams?

There are two simple ways of avoiding personal loan scams. Number one, you should check whether the financial institution that you are eyeing is licensed. Then, you have to verify their claim by manually checking on the list provided by Singapore’s Ministry of Law. Only apply for a personal loan when the credit institution fulfills these stated qualifications to avoid getting entangled in loan scams.

Conclusion

A1 credit is the most reliable licensed moneylender in Singapore, and if you are considering applying for a personal loan, you should look into A1 credit. They offer flexible loan packages that are catered to whatever your current need is. Whether you want to enjoy a quick vacation or you need to pay some urgent bills, A1 credit is here to provide you with amazing options. Contact them by visiting their website to get you started on your road to a financial opportunity.

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