How to Legally Borrow Money in Singapore
Indeed, paying off bills without the help of anyone can be very hard. This is especially true if you are living in Singapore, which is considered one of the most expensive cities in the world. Expenses like wedding costs and medical bills can increase up to thousands of dollars in an instant.
When you don’t have enough money to pay off these expenses, sometimes, you don’t have any choice but to take out loans from financial institutions. However, banks might have a stringer and long process that might not be helpful in your case when you need cash immediately.
This is the reason why when we talk about loans, moneylenders are a nice option than banks since they have faster loan approval. However, borrowing from them might not be something that everyone considers. Everyone is concerned about borrowing from the moneylenders. Contrary to popular belief, the Ministry of Law regulates licensed moneylenders. As such, it is safe to borrow money from them. Before borrowing money from them, here are things that will help you:
Know your Ability to Follow the Contractual Terms
Before you borrow money Singapore from the licensed moneylenders, make sure that you determine whether you can follow the contractual terms of the loan. Borrowing from the lenders will make you agree with the terms and conditions on the contract. This includes the repayment of the loan plus the interests. As such, you must gauge whether you can abide by the terms of the loan by taking into consideration your financial obligations and income. As much as possible, borrow what you can repay given your situation.
Determine the Type of Loan that You Need
Before you start your application on the loan, see to it that you evaluate your finances and decide the type of loan that you can take out. Check if you are dealing with a small or big agency. If you are experiencing minor crises and require only a small sum of money, personal loans are the best loan that you can have. This is suitable for paying off credit card debts and home renovation.
Unsecured personal loans refer to the type of loans depending on your financial situation and credit history. Since they are unsupported by any tangible asset, unsecured loans have higher interest rates versus secured loans. It can be loans amounting to $100 to $80,000 or higher.
Secured personal loans are a type of loans that you take out using an asset as collateral. Examples are gold, car, property, fixed deposits, and jewelry. You can use the secured personal loans to buy the asset or you can already own the asset. In case you fail to pay the loaned amount, the lending company will take possession of the collateral. As such, there is less risk for the lender and they will offer you lower interest rates.
Short-term loans are taken out for short periods only. It lasts for under a month or one year. This is also called as payday cash or cash loan. The purpose of this loan is to offer a small amount of money very quickly with minimal credit score requirements. Unlike other loans, the interest rate of the short-term loans is higher. The fees can be up to 4% from a licensed moneylender.
Bad credit loans are offered to borrowers with bad credit scores. This type of loan comes with flexibility eligibility criteria based on whether you can afford the repayments. Your employment, income, debts, and assets determine this type of loan. Unlike other types of loan, this one has higher interest rates to offset the easy application process.
Finally, the peer-to-peer loan (P2P) is also called as marketplace lending. This type of loan does not require you to go through a typical lender or bank to borrow money Singapore. The P2P lender will act as a facilitator. The investors provide money to the borrower. In the United States and Europe, P2P websites would lend money to businesses and individuals. However, in Singapore, P2P websites loan money to businesses only.
Consider the Amount to Borrow
For secured loans, you can borrow any amount that you want. Meanwhile, for unsecured loans, the loan amount can be different. If you have an annual income of less than $10,000 and you are a Singaporean citizen or a permanent resident, you can borrow $3,000 only. If you are a foreigner residing in Singapore, you can borrow $500 only.
Meanwhile, if you have an annual income of at least $10,000 and less than $20,000 and a citizen, then you can borrow $3,000. For foreigners residing in Singapore, then you can also borrow the same amount.
Finally, if you have an annual income of at least $20,000, then you can borrow 6 times than your monthly income.
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