When faced with a shortage of finances, one of the best options to fill the gap is a personal loan.
It provides the cash you need to make a major purchase and allows payments in installments so that it does not become a major burden.
If you are new to personal loans, some of the questions that might be running through your mind might be, “Is a personal loan good for me?” and “Who is the best lender?”
A Deeper Look at Personal Loans in Singapore
When applying for a personal loan, you request a specific amount of money from a lender. The loan is an unsecured type of credit, implying that the lender largely checks your credit score to determine your creditworthiness and ability to repay.
Unlike other types of loans, such as mortgages, where the seller receives the funds, a personal loan is different because cash is deposited in your bank account.
- Before you can apply for a personal loan, it is important to understand a number of related terms.
- Principle: This is the amount you borrow from the lender.
- Monthly Interest: The interest is the monthly charge added to the principle and it is expressed as a percentage rate.
- APR (Annual Percentage Rate): In addition to the monthly interest rate, you should also use APR to determine the cost of the loan. APR factors both monthly interest rates plus any additional fee for the loan and it is a great consideration for comparing personal loans.
- Loan Term: When your loan is approved, you are given a specific period to repay. This period is referred to as the loan term, and it is crucial in determining the amount payable. The longer the term, the higher the amount payable.
Where to Get Personal Loans: The Best Lenders in Singapore
Today, there are many lenders you can turn to for personal loans in Singapore. Here are the most common:
Most Banks in Singapore offer different types of loans, including personal loans. Note that the terms and conditions for loan approval might vary from one bank to another. However, you need to be able to repay the loan and have a good credit score to get the loan approved.
Virtual Money Lenders
As the name suggests, these are lenders that offer their services without having a physical presence. They are able to provide their services at lower rates because they do not have a lot of overhead costs, such as maintaining expensive premises downtown. Virtual lenders have become very common in Singapore as financial services continue to diversify.
Online Money Lenders
As technology advances, more people are opting for online lenders because they are convenient. Imagine having to apply for a personal loan when relaxing at home and getting it approved as fast as possible. Because of the large number of money lenders in Singapore, online financial organizations have very creative features to help them attract more clients.
When applying for a personal loan, it is prudent to have a look at what online money lenders have to offer before making your decision. For example, you can get an online lender with zero fees and very lower interest rates.
Things to Consider When Applying for a Personal Loan
Now that you know the best personal loan lenders, the next step is application. Here are the main things to consider when applying for a personal loan in Singapore:
- Personal credit score: This is a very important factor because lenders use it to determine the personal loans’ interest rates.
- Why you need the money: Although personal loans provide you with a free hand on how to use the money, it is important to direct it to where it will have the greatest impact. For example, using a personal loan to consolidate high-interest loans can be a great idea.
- Personal repayment capability: This is very important because it determines how comfortably you can repay the loan. It is advisable to only borrow the amount that you can repay without causing unnecessary strain on your personal finances.
The growing number of personal loan lenders in Singapore is good news, but it implies that identifying the best one can be challenging. Do you borrow from a bank or an online lender?
The best way to compare the lenders, their terms and conditions, and make the right decision is using comparison sites, such as Lendela. They work with a wide network of lenders, implying that application for a personal loan is easy and comparison comprehensive.