A family emergency, paying for college, a wedding, a vacation, or purchasing a car are urgent financial requirements you can quickly and affordably meet with personal loans in Singapore. A personal loan is also considered a reasonable financial tool. For instance, you can better manage your loan repayments with a debt consolidation plan, a type of personal loan in Singapore. It operates by combining all of your debt repayments—including those from numerous credit cards—into a single, sizable loan with just one bank or financial institution.
Banks and other financial organizations want to lend you money because that is how they earn their living. However, the lenders must carefully consider each loan application and ensure you can repay the loan on time. This is why not every application for a personal loan will be approved, especially if there is an eligibility discrepancy or missing documentation. To improve your chances of obtaining the loan you require, keep an eye out for these aspects when applying for a personal loan in Singapore.
Make sure you’re eligible.
There are some fundamental conditions for personal loans; failing to meet them is a typical cause of loan application denials. One standard eligibility condition is the minimum income requirement, which varies between lenders and depends on your citizenship status. For Singaporeans, the minimum income requirement for banks is S$20,000 or S$30,000 annually; for foreigners, this can increase to S$42,000 in some circumstances.
Luckily, other lenders, such as authorized moneylenders and internet lending platforms, have lower income criteria. This implies that people who don’t match the income requirements set by banks will find it simpler to obtain personal loans through these channels.
Besides your income level, your citizenship status may also impact your prospects of acquiring a personal loan in Singapore. Some lenders stipulate that only citizens or Permanent Residents should apply since they do not issue loans to outsiders.
Evaluate your credit record.
Banks primarily consult the Credit Bureau Singapore (CBS) Report when discussing your credit history. Cleaning up your track record is only problematic because it is a 12-month record and can take some time. If your recent performance has been generally strong, it might just take a fraction of a year. This is how it goes:
Your credit history during the past 12 months
Your account history is recorded and given a letter grade for each credit facility you have with the bank. Having an “A” grade for the last 12 months is best. You should also have an “N” in the second row to demonstrate no outstanding balances. Last but not least, you want a “Y” for the second row to indicate that you have paid your credit card in full.
Since this is calculated on a rolling basis, if you have an “H” record in your third month, it will take nine months to remove it from your report. Conversely, if it is in your ninth month, it will take just three more months.
Your total number of inquiries
CBS receives a request for information every time you apply for a loan. A high volume of inquiries will therefore give the impression that you are taking on additional debt, which can reduce your credit score. Sign up for fewer credit facilities or work with a broker to combine your inquiries to prevent this. However, it may be challenging to have the number of inquiries removed from your record since it has been kept on file for two years. You should give your applications three to six months between each.
Ensure your debt level is manageable.
In Singapore, borrowers are limited to taking out unsecured loans 12 times their monthly salary. This includes unpaid debts and credit card bills. This means that a lender may deny your loan application if you try to apply for a personal loan that would increase your unsecured debt to more than 12 times your monthly income.
Or, you might only be approved for a modest loan – up to your personal unsecured loan limit — which might not be adequate for your needs. Consider paying off your current credit card bills or other loans to keep your debt level low and reasonable.
Keep the loan amount low.
Maintaining a low loan amount may help you improve your odds of obtaining a personal loan in Singapore. This is because bigger loans are inherently riskier for the lender and hence more challenging to get. On the contrary, lenders consider smaller loans to have a lower, more tolerable degree of risk and might be simpler to approve.
Just because a lender can approve the maximum amount doesn’t mean it is what you should borrow. Always borrow only what you need and no more. This will assist you in avoiding having a heavy debt load and keeping your personal loan amount minimal. It’s a good idea to evaluate your remaining unsecured debt to ensure you can get the loan amount you need. Consider consolidating your debt to make it more bearable.
Use a co-signer or guarantor.
Two people can apply for a loan jointly under certain circumstances, such as remodeling financing. This is a possible option for obtaining a personal loan even if you do not meet the loan’s eligibility conditions because just one applicant must meet them.
A loan guarantor is required in other situations. This is typically necessary when taking out an education loan because the applicant can probably not independently meet the loan eligibility requirements. It’s critical to discuss the dangers involved candidly because co-signers and guarantors will also share responsibility for the loan.
An ideal credit rating is critical to obtaining a personal loan in Singapore. Ensuring you consistently pay your debts on time will help you have a decent credit rating. This entails keeping a balance-free credit card account and timely payment of credit card or loan installments. If you have a less-than-ideal credit rating, making on-time payments for the upcoming few months will demonstrate a pattern of economic responsibility that lenders look for to increase your eligibility.