The fact that one is an adult, in employment or in business, it automatically translates to handling responsibilities. To handle them responsibly, one ought to have some savings set aside to caterto them as the days go by. But at times, fate may strike, and the demand for more money starts calling.
This is not the time to panic but exercise your due diligence and know who can extend such monies to keep you going. Luckily in Singapore, many financial institutions extend credit to the residents and foreigners permitted to work here. Among the popular lenders are Licensed Moneylenders and Banks.
In this article, we will know how each of them works and decide after knowing how long it will take to get a personal loan in Singapore.
- Ease of Borrowing
Licensed Money Lenders– If you are looking forward to getting a loan from a licensed moneylender in Singapore.It will essentially take a day or even minutes to approve the loan if all the requested documents have been submitted. Some popular ones like online credit are known to have the money land in your bank account within a day. Additionally, applying for a loan from a licensed moneylender is easy because most forms are submitted online, making the application process more manageable.
In such a case, if you are in a hurry to get a personal loan in Singapore, going this way could be the most preferred way.
Banks– Taking a personal loan from a bank in Singapore is a lengthier process. For one, the approval time can take a few weeks or at least several days. This is so because of the banks’ stringent credit assessment processes, which the Licensed money lenders do not practice
The long review process results from the banks ensuring they have critically followed the due diligence per the instituted policies.
- Interest Rates
Now before even going so deep, let us have a look at the interest rates chargeable by each of these corporations when it comes to giving out personal loans;
Banks offer relatively low rates compared to Licensed Moneylenders. For instance, using the DBS as the benchmark, the annual interest rate range between 2.88% to 20.1% in banks,The interest rate a borrower is given in this case, depends on the credit assessment and your income( the lower the income, the higher the interest rate).
However, the interest rate is chargeable to about 4% per month when it comes to licensed moneylenders. This rate can be confusing to borrowers- It is vital to take note that 4% for licensed moneylenders is per month, while 2.88% per month for banks is on an annual basis.
In such a case, the banks have it all when looking out for the best interest rate.
For each of the organizations to run efficiently, they are regulated by a uniform body. The Monetary Authority in Singapore seeks to ensure that fair practices in the credit industry are taking place. In such a case, both organizations carry an equal share and work hand in hand towards ensuring that the loans are disbursed rightfully.
However, this does not mean there are no unlicensed moneylenders in the industry. As such, when making a loan application, the borrower should ensure that they are operating with a licensed moneylender to avoid falling into the hands of loan sharks who may charge exorbitant fees and other unregulated fees by the Monetary Authority in Singapore.
- Loan Tenure
This refers to the time it will take for the loan to be repaid in full
Licensed Moneylenders– They offer short-term loans compared to banks. Since they are confident that the loan will be repaid soon, their processing time is often shorter than that of the banks.
Banks– The loan tenure for traditional banks ranges between 5 and 7 years. This is typically done to make the repayments more manageable, though it will automatically charge high in terms of interest.
Considering this, licensed moneylenders could save the day since banks will also take time interrogating the ability to pay the personal loan in the long run.
Factors that Affect the Fast Turnaround Time When applying for a Personal Loan in Singapore
Some of the factors affecting the turnaround time include;
Credit Scores-Credit Scores prove how disciplined the borrower regards loan repayments. Lenders will therefore check your credit history, which may take time, especially for banks, before the approval goes through. Sometimes, some organizations may decline your application if the credit history is wanting.
Source of Income– Before any approval, lenders will ensure that they confirm the source of income. For instance, employees could have a faster approval process than entrepreneurs, who may need physical visits to verify that the business exists.
Preparedness- The borrower should be prepared when starting the loan application process by ensuring that the documents are in place. The faster you submit your loan application documents, the faster it will take to process the loan.
Points to Note to Ensure that Your Loan will be processed Fast
As you start making the loan application, some of the pointers that can facilitate faster processing of the loan include:
- Eligibility Confirmation- Confirm with your lender if you can get a loan by checking your credit scores and income proof.
- Ask any Questions- Always query about the loan’s interest and tenure, and get to know what to do next in case of default.
- Gathering Required Documents- Once you confirm that you are eligible,ensure you have all documents in place, such as the NRIC, CPF, computerized payslips, or the Income-tax Notice of Assessment.
When it comes to the processing of loans, every organization has its criteria.
Essentially, licensed moneylenders do not have stringent measures as it is for the banks, and as such, the faster processing time is for them.
But all in all, both licensed moneylenders and banks are great avenues for accessing credit in Singapore. It will all depend on the urgency and the appetite for handling the interest rates.