There are many reasons that people need personal loans. Most of the times these loans are borrowed either to manage cash flow or for any emergency situations. People do not like to take such loans from family or friends if the amount is large. Despite the fact they will not charge any interest, nobody will want to burden their family or friends. People should approach banks or other financial institutions for getting such loan. One of the major things that they have to consider is the interest rate of personal loan in Singapore.
Understand How Personal Loan Works
A personal loan is a loan that is either provided by banks or by other moneylenders and financial institutions. People can pay the loan back in the form of installments or on one go. The tenure for repaying the loan ranges between one year and seven years. There can be many reasons for which people can go for such loans but it is recommended that personal loan should not be taken for home renovation or for education. It is so because there are separate loans for both of them that are available at lower rates of interest.
Choose between Secured and Unsecured Personal Loans
Personal loans can either be secured or unsecured. In Singapore, most of the personals are unsecured. In the case of unsecured loans, there is no need of collateral but the cost of this loan is high. Comparatively, collateral is needed in a secured loan but its cost is low. People will have to lose the collateral if they are unable to pay the loan on time. Personal loans are affordable in comparison to credit cards and people can borrow a large sum to meet their requirements.
Consider the Eligibility Criteria in Getting a Personal Loan
Here are some of the conditions, which people need to follow while applying for a personal loan.
Citizenship
People who want to take a personal loan in Singapore can be a permanent resident of the country or a foreigner. The age of the borrower should be in the range of 21 and 65 years.
Annual income
The next thing that moneylenders check is the annual income of the borrower. Permanent residents of the country must have the annual income of at least $20,000 per annum. People whose annual income is in the range of $20,000 and $30,0000 have to pay high rate of interest. People whose annual income is more than $30,000 will get the loan at a low personal loan interest rate in Singapore comparatively. If the borrower is not the citizen of the country, his annual income should be in the range of $40,000 and $60,000. Along with it, 12-month validity and an employee card is also required.
Amount to be borrowed
People come with a demand of the amount that they need for their requirements. Lenders have to decide about the loan on the basis of the credit record along with different credit facilities available with the borrower. People whose credit score is good, they might get a high amount of loan at the lowest interest rate. If people opt for unsecured personal loan, the amount, which they can borrow can be four times of their monthly income. The amount of secured loans depends upon the value of the collateral that borrowers provide.
Cost of personal loan
A fixed time period is given to the borrowers in which they have to repay the loans. The installments along with the rate of interest have to be paid in that time period. Processing fees is also included in the repayment. People need to check interest rates and other hidden fees so that they do not need to pay more.
Finally, Be Familiar of the Interest Rates
Here are the types of interest rates on the basis of which personals loans in Singapore are provided.
Nominal Interest Rate
Personal loans are of dynamic nature and that is the reason, people can find the banks with a label of X% for the interest on personal loans. People will know about the interest rate of their loan only after the approval of the application. There are many factors on which the interest rate depends and these are as follows.
- Credit record
- Other credit faculties
- Amount borrowed
- Tenure of the loan
Effective Interest Rate
This is an interest rate in which all the hidden fees are included. It also includes the schedule of loan repayment and processing fees.
Processing fee
Some of the banks offer the loans at 0% interest but they charge processing fee, which can be 2% of the amount borrowed.
Wrapping Up
Your familiarity on how personal loan works in Singapore is vital in getting the best loan offer. You must understand especially how the interest rates work. To grasp more idea on how you can find the right personal loan offer, you can seek help at EasyFind lowest interest personal loan in Singapore.
