Financial difficulties can happen to anyone, may they be rich or poor.
For Singaporeans who face this problem, it is advisable that they know at least one or two licensed Singapore moneylenders so they can apply for a quick personal loan.
Contrary to popular belief, getting a personal loan is quite easy from moneylenders. They have relaxed requirements as compared to banks and credit unions offering the same services. They even have cheaper interest rates and pay schemes are flexible. As a result, moneylenders are great if you are looking fast money for that sudden bill or expenses.
However, many people tend to stray away from moneylenders because of reports that borrowers from moneylenders tend to find themselves into trouble because they do not understand the rules of moneylenders when it comes to their loans. Because of this misunderstanding, they become unable to pay and get into further trouble.
If this is your first time to borrow and when you already selected a moneylender for your personal loan, do not immediately sign up on the personal loan you selected.
Ask the following questions to yourself and to the moneylender before you borrow:
Why are you borrowing a personal loan?
Before you borrow money from a moneylender, you have to ask yourself the reason why you need the money for. There are many reasons as to why people tend to seek personal loans: from sudden expenses, emergencies to debt payments.
If you are borrowing money to pay off another cash loan, you should see it as a sign that you are in a debt crisis. It is unwise to use another personal loan to pay your old loans because you are just adding more debt for yourself. When you do find yourself in this predicament, ask a debt manager to give you financial advice on how you can pay all your debts.
Are there other ways you can get money?
Moneylenders come at all sizes and prices. Before you go to a moneylender, try researching the prices of other moneylenders and firms for the same loans and compare them. Some moneylenders offer free estimates so you don’t have to worry about the extra costs of getting loan estimates.
How much are you going to borrow?
When you see the prices and picked the moneylender that would work with your requirements, it is now time to ask yourself how much you need. Once the moneylender approves your loan, you can borrow any amount.
However, if you are after an unsecured amount for your personal loan, Singapore’s moneylenders are required by law to consider your personal income because you need to guarantee the moneylenders that you will be able to pay it.
Here is a guide on the loan amount limits moneylenders would use when considering your loan request:
- If you have a yearly income of less than $20,000, you can only borrow up to $3,000
- If your yearly income is between $20,000 to $30,000, you can borrow up to 2 months’ income equivalent of your regular income.
- If your yearly income is between $30,000 to $120,000, you can borrow up to 4 months’ income equivalent of your regular income.
- If your yearly income is $120,000 and up, you can borrow any amount you want.
How much is the interest rate?
Personal loans and all the other loans in the market come with interest rates and under Singaporean law, it is capped at 4% per month.
If you are late with your payments, it also comes with a 4% monthly interest rate.
Is there an extra fee or so on the loan you will borrow?
Like any other financial product in the market today, it is crucial you ask the moneylender if you will need to pay extra fees aside from the interest rate for your personal loans.
Under Singapore law, moneylenders can only charge these extra fees aside from the interest when:
- If you are late for repayments, you get a late interest of 4% per month.
- You will also pay an extra $60 if you pay late.
- If the moneylender has to recover the loan, you will need to pay the legal costs.
Can you pay for it?
While moneylenders would consider your income when you apply, you yourself should ask yourself if you can pay it without delay. Aside from your loans, you will have to consider the things you need to purchase or pay regularly, as well as savings for emergencies and other sudden expenses. You also have to see if you can to pay other debts aside from your regular expenses alongside your loan.
Total everything you need to pay monthly and try checking if you can add the monthly payments for your loans. If you see that you can still have a few saved up for those sudden fees and other expenses with your monthly expenses and payments, go for it.
If your pay is not regular or small, you should sit down with your moneylender and discuss if you can get a flexible payment scheme that will match your paying capacity. Just explain to the moneylender your situation and they will be happy to assist you. They do need to ensure their money will return back without problems.
If you are late with your payments, immediately speak to your moneylender if you would need some extra time to pay it.
If you need money for emergencies and sudden expenses, getting a personal loan from a moneylender is quick and easy. However, before you sign anything, it is important you have done your research because once you sign that contract, it will be difficult to contest whatever is in your contract when you are in a bind.
Remember, it doesn’t hurt to ask moneylenders anything you might need to know about your personal loans and research about it, then customize it to your specifications if necessary.