In Singapore, getting a personal loan is a rather straightforward process. But only when you follow the right channels. Some lending institutions in Singapore include moneylenders and banks among others.
Moneylenders represent a small part of the official lending institutions approved to provide loans. However, money lending is a growing business, therefore you can consider borrowing money from licensed moneylenders. But first, make sure that you have confirmed that the moneylender is licensed using the moneylenders’ list in Singapore.
Next, you will need to check that their business is above board and transparent. This is since even some of the licensed lenders may be a bit suspicious. The lender should clearly explain the conditions and terms of their personal loan contract to you.
Also, they should present you with a copy of the loan contract. They need to also to confirm your contact details and even follow up by sending you email or calling you so as to verify your identity. It will also help in confirming your application for the personal loan.
On the occasion that they attempt to do anything unethical, such as holding onto your Identity card or even offering you a blank document to fill instead of the loan contract. Make sure you report such lenders immediately to the right authorities.
However, before you are given a personal loan, you have to ensure that you know all the rates as well as fees that will be imposed when you take out a loan from licensed moneylenders.
Even after you have received a loan, there are some steps that you still need to take to ensure that you do not get cheated on the loan. Here are some things to do once you have received your loan amount.
Confirm The Loan Amount Issued
While you are collecting your loan amount, ensure that your moneylender grants you the right loan amount for the loan principal. According to the law, moneylenders should only charge borrowers a fee not exceeding 10 percent of the loan principal amount during the time the loan is being granted. Always ensure that the lender deducts exactly 10% of the loan, and nothing more.
Schedule a Repayment Plan
Since you have been authorized for some funding, done the small loan application process, and even received the loan amount. Always make sure that you repay the loan taken so that you do not jeopardize all the future approvals for your loan.
Make sure to include the repayments to the monthly budget, note the loan payments dates, or better yet, set up an automatic payment from your account. This will ensure that they are paid on time. Failing to repay your outstanding loan—or missing some payments—will only impact negatively your score.
Through making repayments on time and in full (which will help build a very good relationship with your moneylender). it will also help you receive better terms and rates the next time you are in need of a personal loan.
Make Prompt Payments
Consider ensuring to pay back your monthly installments promptly. By doing this you will avoid incurring late payment charges and even interests charged on any late payments.
According to the law, licensed moneylenders are permitted to charge borrowers a fee amounting to S$60 (and not more) for every month that they make late payments. This also stipulates that a 4 percent interest rate on every month that a borrower makes late payments.
Ensure You Get a Duly Dated And Signed Receipts
Each time you repay a loan, the moneylender should issue you a with a receipt which is duly dated and signed. This also applies to all charges that you are expected to pay in cash to your moneylender. Once you receive the receipt, confirm that everything is correct, like the amount, names, date, and also the signature.
Ensure You Receive Loan Statements
During the period you will have received your personal loan and are paying it back. You should at least receive every 6 months receive an account statement for all the loans you will have taken. You should also check these too for any errors and confirm that everything is done correctly.
Secure Key Documents
Always keep all statements of account and receipts as proof for payment. Make sure they are safely kept and are up-to-date.
Plan For Prepayment Opportunities
Once you are approved to get a loan, you need to have been made aware of any prepayment opportunities available. These might mean making double your loan payments on the set payment dates, submitting lump sum repayments during anniversaries and other dates. Better yet, when you can settling the whole loan amount before the maturation date.
But, there are loans that attract penalties for prepaying, since the lender will end up losing on the interest they would be making if the loan goes for the full tenure instead. Consider this carefully to ensure that you understand how your specific loan is structured.
When your cash flow allows you to make a prepayment directly to the borrowed amount. You can save on interest, as well as grow your credit score to indicate that you repaid a loan in full.
Refinance Your Debt Into One With a Lower-Cost
You might consider refinancing a personal loan, more so if you have taken a short-term loan which you have made all your payments on time and in full.
You could refinance your outstanding into a long-term and lower-rate. This is especially when your income is increasing and credit is been improving.
Over time you will be able to show that you are a responsible borrower, then it may be worthy to refinance. This will reduce the interest and cut off hundreds or also thousands of dollars off your loan cost.
In Singapore, loans are very flexible, thus meaning that you may use them for accomplishing any number amount of uses. You could pay for tuition, make payments on apartment/house, obtain a car title, or maybe use it to go on a holiday with your family.