Doing your homework as a potential borrower can go a long way. This, in turn, may boost your chances of getting your loan approved efficiently.
Application approval depends on the financial institutions, but one thing they have in common is that they want diligent borrowers, who can show enough proof that they can pay back according to the agreed period.
To increase your chance, here are 5 tips and ways to get a loan approved in Singapore:
1. Learn More about the Total Debt Servicing Ratio (TDSR) Framework
Knowledge is power in every aspect of your life, including personal finance. It helps to know things. And that applies to borrowing loans for your financial needs. Knowing what you are doing helps a lot because it prevents you from making unnecessary mistakes. It’s one of the ways to get any business or personal loan approved easily regardless of the amount you need.
Knowledge is power in every aspect of your life, including personal finance. It helps to know things. And that applies to borrowing loans for your financial needs. Knowing what you are doing helps a lot because it prevents you from making unnecessary mistakes. It’s one of the ways to get any business or personal loan approved easily regardless of the amount you need.
You need to bear in mind the fact that licensed moneylenders must follow certain rules when processing people’s loans. That is what being a regulated money lender is all about.
The rule is in place for a reason. It helps prevent borrowers from having a huge amount of debt that overwhelms them and destroys their quality of life. What is the point of having an income you cannot enjoy?
It’s why money lenders tend to ask what your income is when you make a personal loan application. Therefore, if you have another personal loan that you are servicing, you may need to apply for a lower personal loan amount the second time around. It may be the only way to get what you need to meet your financial needs.
2. Improve Your Credit Score
Lenders look at your credit score and credit report to determine how much of a risk it is for them to give you the loan amount you need. Both the good and bad financial decisions that you make in your life will be reflected in your credit score. A low credit score is an indication that you are likely not making good financial decisions.
And that kind of score could prevent you from accessing a business or personal loan that you desperately need. It also affects the interest rate. A higher interest rate goes hand-in-hand with the higher risk associated with lending you money.
Before applying for best personal loan Singapore and getting rejected, take a good hard look at your credit score. According to the Credit Bureau of Singapore, credit scores range from 1000 to 2000. Those who have a score of 1000 are more likely to default and those who have 2000 or close to that higher number are ideal borrowers who are deemed financially responsible.
One way to implement this strategy is to get a small loan that you can access despite your credit history. Several money lenders can do that because they determine your ability to pay based on your pay cheque. That gives you a chance to slowly increase your credit scores so that when you need a bigger business or personal loan, you will be in a position to get approved. Want to learn more? Check out how to clear your bad credit history in Singapore.
The second strategy that will enable you to improve your credit score is by restructuring your unsecured debts. When you delay paying off what you owe, it reflects badly on your credit history. It also lowers your credit score. However, bad credit scores are not the end of the road there are always ways to repair bad credit scores to enable you to get loan approval.
So, debt restructuring allows you to reorganize your debts to ensure that you can pay them in an easier manner. It’s a good option if you are in financial trouble because it allows you to continue paying your personal loans without becoming insolvent.
Credit Counselling Singapore can help you restructure your debts so that you can catch up with your payments. One common way of tackling runaway debts is through debt consolidation, which consolidates all your debts into one for easier debt management.
The repayment plan you end with will enable you to take back control so that you can begin the process of improving your credit score. It may require you to get rid of most of your credit cards. But having fewer credit cards makes personal finance sense if it means paying your debts more conveniently.
Once you raise your credit scores to a respectable level, you can borrow another loan. When lenders see your improved scores, they are more likely to approve your request.
3. Make Sure You Are Eligible and You Bring the Required Documents
Having the required documents can ensure your personal loan application goes through quickly because it proves you are eligible.
Eligibility and requirements vary from a moneylender to a moneylender. But there are standard documents that most money lenders will ask for regardless of the loan amount borrowers require.
Typically, you must be at least 21 years old with a minimum salary of $2,000 for citizens and permanent residents and $3,000 for foreigners. For the required documents, please refer to the checklist below:
For citizens and permanent residents:
- Identity Card
- Proof of residence
- Proof of employment
- Singpass
For foreigners:
- Passport
- Work permit
- Proof of residence
- Proof of employment
- Proof of income
- Singpass
Failure to provide a money lender with the required documentation may result in application rejection.
4. Check the Market Conditions
Knowing how the wind blows is also an effective loan approval strategy. The market conditions matter. In times of economic distress, lenders tend to withhold money from borrowers especially those they deem too risky.
On the other hand, if the economy is doing well, and the country is dealing with favorable interest rates all around, your chances of getting your loan approved are much higher. Sometimes, it’s all about timing.
So, if your loan gets rejected, don’t always take it personally if you have done everything you can to qualify for one. When the economy stabilizes, you would be in a much better position to access the loan that you need.
5. Seek Non-Bank Financial Institutions
Your go-to source of loans can also determine your access to a much-needed financial boost. One way to get your loan approved is by finding the right lender to borrow from.
You may be dealing with rejection because you like to borrow from banks, which sometimes have stricter eligibility criteria. They can afford to reject you because they have many corporate clients who transact money in their millions.
While there is nothing wrong with borrowing money from banks, it helps to look at other sources. Think about getting a loan from a licensed lender. Regulated lenders operate under a set of binding rules that enables borrowers like you to get loans at favorable terms.
An example of a money lender worth considering is A1 Credit. The licensed money lender offers fast approval of loan applications, which makes it worth trying out in times of financial distress. The company also offers low interest rates and flexible repayment terms.
It’s also worth noting that A1 Credit has a good reputation and has been in business since 2009. The lender has high ratings on Google and Loan Advisor and even made it to the 2020 top 10 money lender of the year awards. That means you will be dealing with a credible institution that will not swindle you and drown you in debt regardless of your income.
There is always a risk that when you deal with unregulated and unlicensed lenders, you will end up in trouble. Most of them are likely to be loan sharks that charge extraordinary high-interest rates. They may even end up threatening you or force you to pay off your debts in ways that can only be considered illegal.
Therefore, it pays to do your due diligence when applying for a loan. Doing your homework is always one of the ways to get loan approval. It can make sure you are in a better position to get a loan that you need on terms that are favorable to you.
If you have further questions, find the best financial institution that has excellent customer care services to help you. A1 Credit boasts of knowledgeable and friendly loan officers that will assist you and ensure your loan gets approved when you need it most.
