Borrowing is part and parcel of life. When looking to finance a huge project, deal with an emergency, buy a car, or whatever you need money for, the easier way to go about it is through borrowing. As a Singaporean seeking to borrow money, you probably ask yourself which is the best loan type to go for.
The truth of the matter is, we have different types of loans, structured differently, and meant for different needs. Of course, the interest rates are directly proportional to your credit score. The poor your credit score, the higher the interest rates.
The better your credit score, the lower the interest rates. The logic behind this is a no-brainer. Singaporeans with a poor credit score are deemed to have a higher risk of defaulting hence the high-interest rates. That said, what are the 4 popular loan types in Singapore that you can go for when you are strapped for cash? Let’s dive right in and shed light on them.
The beauty of personal loans in Singapore is that they are unsecured and you have leeway to use the cash however you want. Yes, you heard me right. You can use personal loans for whatever need be it a medical emergency, a vacation in some exotic tourist destination, or simply to buy an asset. There are no restrictions. Personal loans in Singapore are further subdivided into two categories.
- Term loan
- Revolving loan
A term loan is meant to be repaid within a specific period and the loan must be fully repaid before the end of the indicated period. A revolving loan on the other hand is best for periodic expenses. In other words, if you are the kind of person who has periodic expenses that need to be met say monthly or annually, then this is the best type of loan to go for.
I mean, this is one of the most popular in Singapore and across the globe, right? A car purchase is a huge investment secondary only to a home purchase. We all have a dream car but more often than not, we are hindered by the cost. We don’t have the money upfront. So what do we do? You guessed it right. We go for a car loan!
Singapore lenders approve car loans based on the amount you wish to spend be it on a brand new or pre-owned car. Here is how it works. If you are looking to buy a car whose total worth is less than SG$20000, Singapore lenders will be willing to only lend you 60% of that car’s buying price. Consequently, if you are looking to purchase a car whose buying price or value exceeds SG$20000, the lenders will be willing to advance you 50% of the value of the car.
Debt Consolidation Loan
This loan type is particularly popular with Singaporeans riddled in debt (have multiple loans) and looking to roll all their existing loans into a single loan. The idea is to consolidate all the existing loans into making it easier for you to make one payment every month.
When you think about it, it is the ultimate deal. You don’t have to worry about multiple payments a month. Living in Singapore and wish to go for a debt consolidation loan? Well, for one, you need to understand that there are certain requirements you need to meet.
To be considered for a debt consolidation loan in Singapore, your existing loans should be 12 times your monthly salary. The moment your debt consolidation loan is approved, you are ineligible to apply for any other loan be it a credit card loan or personal loan until such a time when you have drastically reduced your loan to 8 times your monthly salary.
As the name suggests, this is an unsecured type of loan that is taken solely to renovate your property. As compared to personal loans, renovation loans in Singapore tend to attract less interest rates and have a longer repayment period of between 1 and 5 years. The loan amount once approved is not deposited into your account but rather into the account of the contractor tasked with renovating your house.
Now that you know the popular types of loans in Singapore, what next? The truth of the matter is that the process of applying for a loan can be tedious and time-consuming. You have to research various lenders, compare their loan plans and interest rates, and whatnot. This can be cumbersome no doubt. Do you have to go through all these? The answer is an emphatic no!
Lendela is the answer to all these. Using Lendela to apply for loans in Singapore has its perks. It’s hassle-free and saves you from the headache of the tedious process of checking out multiple lenders. You visit Lendela site, make an application which only takes a couple of minutes, receive offers from different lenders in Singapore, pick your lender of choice, Lendela books an appointment on your behalf, you get to sign the loan agreement, and voila! money is deposited into your account!