Things To Consider – A First-Time Borrower in Singapore
The process of acquiring a loan in Singapore might not be very easy to understand for beginners. With a variety of options available and a limited amount of knowledge, borrowing money can be a bit frustrating as it puts individuals in a dilemma. First-time borrowers in Singapore face a number of unique challenges when it comes to taking out a loan. There are many things to consider before deciding to borrow money, and first-time borrowers may not be aware of all of the potential pitfalls. Here are some things to keep in mind before taking out a loan as a first-time borrower in Singapore.
Secured Loans And Unsecured Loans
Before someone applies for a loan, they need to be sure about their purpose for applying. Banks and other institutes offer a variety of loans for different purposes. Each loan has a vivid characteristic. It is important to collect appropriate knowledge before applying for loans.
Their demand for collateral can differentiate secured loans and unsecured. Secured loans ask the borrower to pledge their property as collateral, while unsecured loans do not. However, the interest rates vary between these two, with unsecured loans having high-interest rates.
The principal amount of a loan, whether it is from a bank or a loan shark, is based on the borrower’s income. Even though their moneylender will be willing to lend them up to six times their monthly wage, they should first decide whether they really need it. Of course, one must also take into account the overall amount they will borrow, which will include interest payments, fees, and charges in addition to the principal. One has to take their personal budgets and direct payments into consideration as they have to repay the loans in a stated amount of time. Many licensed moneylenders in Singapore offer quick loans which can be paid back electronically by the method of direct payment. A borrower needs to check these methods, too, and opt for a loan accordingly.
The effective interest rate (EIR) and the advertised interest rate (AIR) must be distinguished by a first-time borrower. If they use AIR, they’ll get simple interest, which is computed by dividing the principal amount by the rate that was offered. The EIR, on the other hand, accounts for fees and a payback plan, so it accurately reflects the loan’s true cost.
If a borrower wants to pay less interest, they should consider a collateral loan because they have reduced rates.
Many banks require the borrower to have a good credit score to offer them a loan. Banks and authorized money lenders in Singapore depend more on a borrower’s track record of on-time payments than on their ability to pay back the loan. Money lenders might often ask for an individual’s Credit Bureau Report. However, while borrowing money for the first time, many freshers have no idea and often ask what does a credit bureau report show?
A credit bureau report shows the health of a person’s credit score and displays how an individual has dealt with their credit card bills and other debts.
Period of Repayment
A borrower needs to check and confirm the duration for which the loan has been granted. Applying for long-term loans may seem very convenient. However, it might become expensive in the future if the true cost of debt is not considered. They are also considered risky as they can leave a person with little to no funds during times of emergencies. However, in Singapore, moneylenders are known to be more lenient as compared to banks; they might provide a flexible repayment plan.
Issues to Note
The first thing first-time borrowers should ask themselves is whether they really need a loan or not. If someone has been fairly irresponsible with credit in the past, they can be easily pushed into debt which will remain with them for years. Another thing borrowers should look out for is the variety of options they will be provided once they become interested in a loan. Borrowers should not limit their perspective and look for the different types of loans they can take up, depending upon their requirements.
Borrowers often underestimate the value of documents when it comes to loans, and they should therefore make sure that they have all their valid identification proofs and other documents with them before they apply for a loan in Singapore. Borrowers should keep in mind that although the moneylender would ask them for personal information like their SingPass details, the company or the lender cannot disclose this information further, according to the Ministry of Law.
Even though borrowers have the convenience of applying for any kind of loan from the comfort of their homes, they should certainly look out for scammers and possible loan sharks, both online and offline. These scammers can appear to be highly attractive and make destructive offers to you. Similarly, borrowers should not rely on advertisements to take up loans from certain moneylenders. They should seek clarification from a licensed moneylender. Moreover, many borrowers overlook the terms and conditions mentioned within several clauses of their loan contract.
It is important for them to not only read through the documents carefully but also contact the lender to provide the borrower with clarifications if need be. In Singapore, no money lender can charge an interest rate of more than 4 percent on any type of loan. Borrowers should not apply for a loan from companies that could possibly scam their customers by charging a higher interest rate.
Applying for a loan in Singapore as a citizen or a foreigner might seem like a daunting task. The trick is to have the required knowledge available to oneself before applying for any kind of loan. When taking a loan, it is important to remember that you are responsible for repaying the debt. This means making regular payments on time and in full. If you are not able to do this, you may damage your credit score, which could make it difficult to borrow money in the future.
Licensed Moneylender in Bugis– Singa Credit Pte Ltd
Established in 1992 and previously known as Yong Seng Credit,
Singa Credit Pte Ltd is Licensed Moneylender in Bugis regularly updated with the latest regulations to be in line with the requirements set out by Registry of Moneylenders.
Please feel free to call 66946166 for more info on our lowest interest rate in Singapore or walk in our office 470 North Bridge Road #02-01 Bugis Cube Singapore 188735.