Do you want some cash, maybe for a medical emergency, buying a car, debt consolidation, paying for education, or purchasing a home asset? One of the best options to help you fill the financial gap is not just taking any form of credit out there but selecting the cheapest personal loan in Singapore.
A personal loan provides you with the freedom on how to use the funds once they are approved and sent to your bank account. Even if you wanted to buy a television set, some of the cash can go into that and the rest into preparing a birthday. There is one more thing - a personal loan in Singapore is unsecured, meaning that you will not need collateral. The lender mainly checks your income credit history over the years before granting the loan.
Things to Consider when Shopping for a Personal Loan
When looking for the cheapest personal loan in Singapore, focusing ahead and thinking long-term is crucial. For example, what is the loan monthly rate and total amount I will pay the bank or lender by the end of the loan tenure? This is just one of the things to think about. Others include:
Why You Need the Cash
Because of the freedom that comes with using a personal loan, it can be pretty easy to be tempted to rush for it, even to do things that they could have saved money for. So, before taking that personal loan, start by asking the question "What value will it deliver?". Some of the excellent purposes to put your personal loan to include:
Consolidating your current high-interest loans, such as credit card debts
Buying the car of your dreams
Paying for tertiary education
Meeting holiday expenses
How You will Repay the Loan
When faced with an urgent need for cash, such as an emergency or cash shortfall in your business, it can be pretty easy jumping to a loan because it is simply available. However, this is not the right thing to do. Instead, you should start by considering how you will repay the entire loan amount within the agreed loan tenure and monthly rate or effective interest rate (EIR).
This means revisiting your budget to ensure that the personal loan monthly instalments plus other debts do not go beyond 30-35% of your monthly income. Once you are sure of what you can repay comfortably, apply through Lendela because here you will find the loans with the shortest processing time.
The Possibility of Refinancing
To approve your personal loan in Singapore, lenders put a lot of focus on credit score. A good lender should be the one that allows for refinancing. This means that if your credit score improves along the way, it will be possible to pull down the monthly rate of interest with a new agreement that can be paid easily with your income.
Avoiding Unlicensed Lenders
When applying for a loan in Singapore, the danger of falling into the hands of unlicensed lenders always looms. How do you avoid them? One of the tricks that loan sharks use is to cheat borrowers that their loans are very cheap.
So, if you find a loan being advertised on social media or similar, and it has very low-interest rates, take some moment to interrogate the lender because you might be on the door of a loan shark. Another attribute of loan sharks is that they insist on getting the loans approved online and all payments done through methods such as credit cards. For any loan offer by a legit lender in Singapore, signing has to be done physically in their offices.
The best way to avoid loan sharks is to use a legit loan comparison platform, such as Lendela. Lendela has stood out and earned trust among Singaporeans because we only work with banks and financial institutions. Therefore, applying for a loan through us is an excellent way to avoid loan sharks and high interest debts.
What You Need to Know Before Making an Application for a Personal Loan
Even if there are many banks and online lenders in Singapore who are willing to approve you, make sure to appreciate the following three crucial things.
A Personal Loan is Unsecured
This implies that you will not need collateral to get the loan approved. If you are unable to pay the loan, this means that the lender cannot come for your car, house or other assets. However, you should ensure to stick with the agreed repayment schedule until the loan account is cleared because defaulting can result in severe damage to your credit score.
The Interest Rate of the Loan
The interest rate of a personal loan is the cost of getting the money you are borrowing. There are two main types of interest rates; the advertised personal loan interest rate and the effective interest rate (EIR).
Instead of using the advertised personal loan interest rate, which is calculated based on the principal only, APR will be a better option because it factors other charges and fees on loan. This means that it provides a clearer picture of the cost of the loan by the close of its tenure.
The Risk of Defaulting Payment
Although we have already mentioned that defaulting to repaying your personal loan in Singapore will damage your credit score, the effect can be more than this. Your damaged credit score implies that you are likely to get future credit at a very high interest rate.
Some lenders will even decline your application for a loan in Singapore.
Now that more stakeholders, including mobile phone contract providers and employers, are insisting on checking the credit reports of the people they work with, a low score could have serious ramifications on your financial health. So, you better put every effort into ensuring the loan is repaid as per the agreement.
You can Use the Loan to Build Your Credit
When calculating your credit score, one of the factored components is the credit history. So, if you can borrow a personal loan and clear it rapidly, it will earn you important points to push the score higher. In addition to clearing the personal loan, consider clearing other outstanding debts too.
Tips to Help You Get Cheapest Personal Loans in Singapore
Now that you know the most important things to consider, we will tell you some unique strategies for getting the cheapest personal loan in Singapore.
Make Sure to Have Good Credit Score
When determining the interest to attach to a loan, banks and lenders in Singapore look at your creditworthiness. This is reflected in your credit score. The higher your score is, the lower the interest rate of the personal loan you are taking in Singapore.
So, you might want to start by improving your score to get the cheapest personal loan Singapore. Consider getting your credit report and checking whether all entries for the last few years are correct.
Shop During the Promotion Period
To attract more clients, banks and financial institutions in Singapore usually give special offers from time to time. So, if you can get lenders offering promotions, it will be a perfect moment for the cheapest personal loans in Singapore.
Check Closely to Ensure the Loan does Not Have Hidden Charges
If you get a personal loan with very low interest rates but a lot of other charges, the chances are that it will not be cheap. For example, if you see a personal loan with an interest rate of 3.5%, it will look cheap, but what about the administration fees?
The lender attaches an additional processing fee of 1.5%, which implies that the EIR of the loan will be 5%. Therefore, it will be a good idea to dig deeper into the finer details of the loan to ensure that the loan is affordable for you.
Apply with Lendela
Another awesome way, we prefer calling it the best, is to apply for the loan via Lendela, a lender comparison platform. We can help you to easily and quickly pick the lender with the cheapest personal loan Singapore based on your situation.
Instead of submitting applications for loans with different banks and financial institutions, we allow you to submit just one application and send it to different banks and financial institutions to increase the chances of approval. Here are the steps involved:
You visit lendela.com to submit a short online application (this only takes a few minutes).
The application is sent to multiple lenders who return with their offers after pre-approval. The processing time is short and could go as fast as a few hours.
You compare the offers’ interest rates and other terms such as monthly instalments and fees. You might also want to check whether it is possible to make monthly payments with your credit card. Lendela will help you to identify not just the lender with the lowest interest rates but also lenders with other benefits.
You book an appointment with the selected lender to sign the chosen loan offer.
Sign the loan agreement and the money will be sent to your account.
When looking for a personal loan, it is essential for your focus to be on the monthly rate, which determines the amount that is paid on top of the principal. Getting the cheapest possible loan approved requires the applicant to start by determining why he / she needs the loan, as well as the personal income, as it determines the ability to repay.
You can get a cheaper personal loan in Singapore if your credit score is excellent, and if you are able to repay the lent amount. Other ways of getting the cheapest possible personal loan include choosing a bank or financial institution with low transaction fees and avoiding loan sharks (and unlicensed lenders). The last and most effective method is using loan comparison sites, such as Lendela.
Lendela increases the approval rates, and the loan processing time is also very short. To identify the best lender for you with Lendela, only a short application is required on our website. Then, the application is sent to different banks and financial institutions, who return with pre-approved offers.
It is important that the applicant reviews every offer’s terms, especially the effective interest rate (EIR) that determines every monthly instalment, tenure in months and years, and fees. Remember to try and keep your overall debt below 35% of your monthly income.
As you can see, picking the cheapest personal loan Singapore requires you to understand how the credit works. With the strategies we have listed above, you are sure of enjoying low-interest loans from banks or other lenders in Singapore. Remember that getting a personal loan approval is only the first bit – the longer road you need to follow faithfully is repaying every monthly instalment on time in line with the agreed terms until the entire amount is cleared.