What is a Personal Loan?
A personal loan is a loan to an individual that is repaid over a period of time with interest. A typical unsecured personal loan does not require for the borrower to put up any asset as collateral. This essentially means that the personal loans are based on two key criterion, personal credit history and monthly income.
From financing a vehicle purchase, to debt financing, to debt consolidation for the purpose of improving credit ratings, everyone chooses personal loans. Mostly because interest rates are significantly lower than credit cards, which could potentially save you a lot of money.
Do You Need a Personal Loan?
We all know that there are those times in life where you could just do with some extra money. Maybe you had to pay for a hefty hospital bill, you need to make a substantial deposit for the purchase of your car, or there is just some crazy unexpected payments that you have to bear.
This would be one of those times that a personal loan could really be useful. You could use the loan to pay off other more expensive debts , make up for previous missed payments, buy something nice for a loved one, or even invest the money.
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No matter what your commitments or reasons are, if you need more immediate cash right now – from $1,000 up to $120,000 – Capable Loans is here to help guide you to the best deals.
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How Your Personal Loan Affects Your Credit Bureau Report
If you do not have a credit line or have a loan with bank, a personal loan can go a long way in helping to build a track record of credit and repayments for you.
The lender will report your monthly repayments to the national credit bureau in Singapore. To ensure that you build a healthy credit history, it is essential that you make all repayments on time.
Try to avoid late or missed payments. It takes only one late payment to affect your credit rating, but a few months of proper repayments to get the rating back up.
Having a consistent track record of prompt repayments will definitely go a long way in improving your credit rating.
What is an Unsecured Loan?
Just like a personal loan, an unsecured loan is offered based on the historical credit history of the borrower, instead of utilizing collateral.
In short, you do not need to own any valuable assets in order to qualify for a personal loan. In most cases, money is only lent out to applicants who have a solid credit history.
Unsecured personal loans, or personal credit lines, involve borrowing from the banks without having to put any collateral up. Simply because there are no assets for the banks to place leverage on, these loans are deemed to be riskier than others.
More risk always means more charge, with higher interest rates and more requirements for higher credit scores.
Personal loans are usually processed faster, involving much less paperwork and less hassle to close the cases. The tenures are usually shorter, from 1 to 5 years, with loan amounts that are usually smaller.
The best part about the unsecured personal loans is that you can do anything you want with it. You could down pay for a car, pay for your school fees, bring your partner out for a romantic treat, or even bring your family on a vacation.
Bear in mind that people with bad credit histories always have difficulties with borrowing from the banks, and interest rates tend to be higher for them. However, if you could bring in an additional guarantor for the loan, most lenders will actually be open to lending.
Who Should Consider a Personal Loan in Singapore?
People who need fast cash should be the ones to consider taking a personal loan. It is due to the fact that no collateral is required for personal loans that makes it so special.
It is strange that a bank would rely on the good faith of her borrowers to ensure that she is paid. For those who do not yet own a property or some kind of asset, sometimes, these unsecured personal loans are the only option that one might have. The good news is that these loans can be used for any purpose:
- Settle older and more expensive debts
- College tuition fees
- Renovation loans
- Deposit on property
- Business operations
- Gas or fuel for the cars
How Do Personal Loans in Singapore work?
The personal loan amount that you can borrow:
– Up to 4x of your monthly income
– Up to 14x of your monthly income
(if annual income is above $120,000)
Repayment Period: Up to 5 years
Interest Rate: 6% – 9% p.a
How To Apply For a Personal Loan in Singapore?
Since the unsecured personal loans are without collateral, and only based on a promise by the borrower to pay, it is safe to assume that past credit history and and the credit bureau report rating are bound to play a significant role in credit assessments.
After completing the applications for the personal loans, applicants are then instructed to submit personal documentation – usually monthly payslips, income tax assessment reports, or CPF statements, to prove that that they are earning enough on a monthly basis to repay the loan instalments.
Under-writings are usually done by automated scoring systems and further assessed by the credit departments, and the applicant will be notified after about a week as to whether the application was successful or rejected. These days, no one actually needs to walk into a bank branch to get a loan. You can simply go online an apply within a span of 30 min.