In Singapore you can get a personal bank loan that is enough to pay for almost a brand-new car, college tuition, and other expenses.
Particularly, personal loans are quickly becoming one of the most popular kinds of loans. And there’s a good reason why this is happening.
Most of the time, the interest rates on personal loans are lower than those on other types of consumer debt. They usually have a fixed monthly payment and a set date when you have to pay them off, and you can usually use the money for anything you want.
Here are some things you should know before you talk to a bank about the best personal loan in Singapore that you can get.
Terms to guide you through the best personal loans from different banks
We will explain these terms to you in the easiest way possible, but the fact that there are two different interest rates and processing fees could sound frightening enough to cause confusion.
Permit us to break down these concepts for you in a part that is condensed and straightforward.
Flat Annual Interest Rate
Personal loans with fixed interest rates are a big selling point for banks and other financial companies. The “floor” rate (also called the “flat” rate) is something that will only be given to the best borrowers, even if it seems like a good deal.
From this point of view, you can get close to or even the flat rate if you have a good credit history and score, or even the flat rate if you have an excellent credit history and score. If this is not the case, you should expect to get an interest rate that is higher than both the flat rate and the effective interest rate.
Effective Interest Rate (EIR)
This number is the average interest rate that people are given when their applications for personal loans are approved. The “limit” is not the interest rate.
For example, if your credit score is between CC and EE, which means that your credit is good to average, you will probably get the effective interest rate if your loan application is approved.
Since EIR rate derivations are only kept by banks and other financial institutions, it makes sense that they are the only ones who can give you the most accurate information about interest rates.
Processing Fee
If you’ve ever worked in a bank or other financial institution, you know how much paperwork, bookkeeping, and other tasks need to be done before loan recipients can get their money.
When this is done, it makes sure that both the lending institution and the borrower have followed the terms and conditions of the loan.
The processing charge pays for doing due diligence, looking into the customer’s credit score, and a number of other administrative tasks.
Monthly Payment
“Monthly payments” is the term that stands out as being the easiest to understand. This is because it refers to the amount you will pay toward your loan every month or period. All banks and other financial organizations do not use the same monthly payment amount.
What to consider Finalizing Your Borrowing Decision
You can find legal money lender in Singapore is a great alternative to bank loans. However, keep in mind that even legitimate lenders can send you spiraling into deep debt.
Before you make a decision, make sure you’ve thought about everything that could affect the time when you have to pay back your loan. Here are the five parts of a loan, and how each one can help or hurt you.
Percentage rate of interest per year
Your licensed moneylender may be able to raise the interest rates they offer by up to 4% each year.
But the interest rate on personal loans from a bank can go up forever, making it almost impossible to pay back until the lender says the borrower has gone bankrupt.
Pay close attention to effective low interest rates for personal loan because these are the real numbers that most people will start with and the rate will only go up from there.
Loan Tenure
You can borrow money from a licensed moneylender for up to a year with a personal loan. During that time, your interest rate will stay the same.
There is a chance that the lender will raise the interest rates from 2% to 4%. If you haven’t paid your bills on time for more than a few months at this point.
It’s possible that the debt management or consolidation service department at your bank or licensed moneylender will get in touch with you or pass on your concern.
Also, it’s important to remember that loans with longer terms will have higher interest rates and more expensive payments in the long run.
Processing fee
Any licensed moneylender can only charge you up to 10% of the total loan principal as interest.
On the other hand, banks often have deals where there are no transaction fees, like some of the bank products we’ve talked about above.
On the other hand, most banks and credit unions add a ten percent administrative processing fee to personal loans. This also applies to people who are allowed to lend money.
A fee for paying off a loan early or canceling it
When you work with a licensed moneylender, you can pay off your loan early and in large amounts.
On the other hand, some banks charge an early repayment fee when a personal loan is paid off early. The amount of this fee is about the same as a penalty.
Your cancellation fee could be the same as or even more than the penalty fee, just like the early repayment fee.
So, don’t plan on paying off your loan too quickly, and don’t stop making payments on your loan.
If you have to pay off the loan early, make sure you have enough money to pay the early repayment fee.
Since you are shortening the length of the loan, the bank will charge you a fee because they will lose money on the interest.
Ongoing promotions
Many borrowers decide on personal loans based on promotions, such as deals with no interest rate increases or no processing fees.
To be honest, it’s hard to find the best deals that fit your current budget. You can stay up-to-date by subscribing to loan comparison websites or looking at the daily offers on those websites.
How Many Personal Loans Can You Have at Once?
There is no law or rule that specifically says you can’t get more than one personal loan at the same time. This is great news for people who might want to do this.
You could, in theory, ask the same lending company for many loans if you wanted to. Be aware, though, that different lenders have different limits and requirements. Some lenders won’t let you do it at all, and others have other requirements you must meet.
These can come in the form of a required waiting period or the need for you to have made a certain number of on-time payments on your first loan before you can get another one.
You can also get personal loans from more than one lender at the same time. Keep in mind, though, that in order to get a personal loan, your financial situation will be looked at to see if you meet the requirements.
It doesn’t matter if you send many loan applications to the same lender or to a few different lenders; you still have to meet the requirements of each lender.
If you have already taken out one or more personal loans, the debt from those loans will show up on your credit report if you apply for a new loan.
The possible new lender you are applying to will want to make sure that your debt is not too high compared to your income. If this is true, it’s possible that you won’t get the job. When figuring out if you can afford the new personal loan you want, the lender will look at both your current monthly payments and the payments from the new loan.
If you have already applied for several loans and it looks like you might be getting in over your head with debt, it is unlikely that you will be approved for the new loan you want.
Even though you can get multiple personal loans from different lenders at the same time, that doesn’t mean it’s a good financial idea.
If you take out a lot of loans, you’ll have to make a lot of different payments every month. This will take up a big chunk of your income, making it harder for you to spend money on other important things.
You may also be more likely to fall behind on your loan payments because you have taken on a lot of responsibilities.
When you apply for a personal loan, the lender will look at your credit report and score to decide whether or not to give you the loan.
Your credit score can go down if you check it too many times in a short amount of time. This will make it harder and more expensive for you to borrow money in the future.
Still, try not to worry if you find yourself in a situation where you have to take out a loan to pay for unexpected costs.
Getting a lot of loans doesn’t always mean you’re going to be broke. Getting many loans can be a good way to get through a hard financial time as long as you make your monthly payments on time and only borrow what you need to get through the hard time.
When it comes to borrowing money, personal loans may be a better option than credit cards. However, taking out a lot of loans at once can still make it hard to pay your bills.
To avoid taking on more debt than you have to, make sure to borrow money in a responsible way and look into all of your options carefully before making any decisions.