The increase in moneylenders in Singapore has made it easier for people to get fast loans. A few years back, Singaporeans had difficulties in acquiring loans and this was because these moneylenders were very few.
The following are some reasons most people in Singapore take loans; vacation, paying school fees, buying cars, paying bills, etc. However, before getting that personal loan that you want, there are certain things that you must be careful with.
Since there is an increase in the number of moneylenders, you must know that some moneylenders are unauthorized, which are not recommended to get loans from. Therefore, the first step one has to take is to look for a licensed moneylender in Singapore. Below are some of the useful tips that will assist you to get a cash loan from a licensed moneylender in Singapore.
1) Necessary Documentation
Before a moneylender gives out a loan, they must be convinced that you are capable of paying back the loan as agreed. As a result, the moneylenders will require some documents from the borrower that will prove to them that you will pay back the loan.
Below are some of the important documents that are required by moneylenders.
• Proof of residence
• Proof of identity
• Copies of all property documents
• The latest salary slip
• Bank statement of previous 3 months
2) Interest Rate
4% per month is the maximum rate moneylenders can charge a person in Singapore. Regardless of the monthly income of the customer borrowing the money and whether the loan is secured or unsecured. In Singapore, when comparing interest rates for personal loans you must know the following interest loans which are
i. Annual Interest Rate
This is the type of rate someone pays per year, for example, if 3%p.a is the charge of your loan, then what you have to do is to pay the exact money that you borrowed plus 3% within that period of the year.
ii. Effective Interest Rate
On the other hand, the effective interest rate is higher than your effective interest rate. This is because the effective interest rate takes into account fees such as several installments, administrative fees, processing fees, etc. Therefore, the total amount one has to pay is interest plus principal amounts, even if some other charges are included.
3) Consider A Short-Term Loan If Your Credit Score Is Low
Below are some advantages of a short-term loan:
• You won’t need a warranty. Significant long-term personal loans, such as home loans, usually require a warranty. While short-term loans emanate with compact principal sums, a dependable moneylender will help the borrower to make an appropriate plan to invest your loan cleverly.
• Lower interest rates. Short-term loans are less risky and have more affordable interests because they’re less risky. The probabilities of losing your salary source or getting in an accident are lesser during a shorter period, and that’s the reason lenders do not have to raise their loan rates to lessen that potential risk.
• Quicker transfers. Short-term loans are not that risky and as a result within one hour, your lender can approve the loan for you.
4) Consider A Long-Term Loan If You Need More Money
Long-term loans permit someone to borrow a lot of money. The most important thing here is to borrow money for the only things that you need. For example, if you aim at continuing your education to higher levels or to purchase a car, this type of loan is advisable.
Below are some of its pros:
• Reduced EMI. As long-term loans spread over a higher duration, the principal sum is therefore also divided into smaller installments. Remember to use a personal loan calculator to discover the correct tenure measurement for the needs that you have. Or else, the additional interest cumulated over a long period makes you lose money in the end.
• Better credit score. If you decide to pay the installments on time, then there will be an improvement to your credit score because hardworking payments reflect topmost finance management capabilities. That is why lenders honor you as a trustworthy potential client. At the back of your mind, you should know that 30% of your credit score will be determined by your financial history, while 25% will be determined by the credit length.
5) Avoid Loan Sharks
Unauthorized lenders target people who have low credit scores. They trick you so that you do business with them, after which the lenders tend to harass and squeeze you for more money.
That is the reason you should at all times make sure you are dealing with a licensed moneylender.
Here is how you recognize a loan shark:
• The unauthorized lender will not request you to come to their main offices for outstanding diligence. As an alternative, they will promise to allocate the loan amount through WhatsApp or phone calls.
• Loan sharks will not ask you for accurate documentation, but instead, they might request you to provide your ID or reveal your SingPass personal information.
• Unlawful moneylenders use violent advertising tactics. For instance, sending ads via e-mail or text messages. On the other hand, licensed lenders can only use their websites, their building walls, or specialized directories to advertise their businesses.
• If you miss a payment, the lenders will harass you.
• Unlicensed moneylenders don’t conduct their doings according to the contract. As a result, a loan shark can escalate the interest rate or else out of the blue to demand more payment. When someone asks you to sign an incomplete contract, then that’s your first clue.
• Illegitimate moneylenders are not on MinLaw’s database of licensed moneylenders.
Before you plan to get a personal loan, then you should make sure to carry out some thorough background checks concerning different moneylenders that you are likely to borrow money from. This background check is very important to avoid some upcoming misunderstandings and, on the other hand, getting connected with loan sharks and also their corny arrangements. The Online credit company has the best terms that will favor your needs.
Debt collectors would mostly help you reduce interest in referring you to the debt consolidation service. You can, however, familiarize this when you deal with a legit moneylender. As soon as it comes to loan sharks, then they can even take properties that weren’t in the contract. This is because you didn’t pay for a certain period. You should therefore make sure that when you are in Singapore, you get the best-authorized personnel loan.