There are many avenues where one can get a loan from — family and close friends, major banks, licensed moneylenders in Singapore, traditional loan sharks and even loan sharks that pretend to be licensed moneylenders. In any case, know that the first three options will always be better than the last two if you’re in search of the best loans available.
Make sure you look out for the following when determining which loan could ultimately be the best one for you and your needs. Then, compare, compare, compare!
Even if you find yourself in need of cash urgently, spend some time and effort to compare before committing to anything to ensure you are getting nothing but the best loan in Singapore.
Minimum income requirement
Banks usually extend loans to customers who make at least S$30,000 per year. They also have stricter criteria in place that borrowers have to meet, such as a clean credit history with little to no incidents of default.
On the contrary, licensed moneylenders in Singapore are much more accessible to borrowers as they typically only require borrowers to have an annual income of at least S$20,000.
That’s not all. Going the licensed moneylender route will definitely be easier and quicker thanks to the more relaxed requirements and fewer documents needed.
While banks may offer ultra-competitive interest rates for those seeking personal loans, not everyone may be eligible for these loans due to factors such as their credit history and/or income.
Decided that that licensed moneylender route is better for you? Keep in mind interest rates are capped at 4% per month. However, some licensed moneylenders may offer lower interest rates than others, similar to how different banks offer different interest rates for their loan packages.
Maximum loan amount
Depending on your income, you may borrow up to 10X your monthly income when taking a personal loan from the bank. However, it is more common for banks to offer borrowers a loan amount of up to 4X their monthly income.
The maximum loan amount that licensed moneylenders can offer is 6X borrower’s monthly income if they make at least S$20,000 annually. This applies to Singapore Citizens, Permanent Residents as well as foreigners residing in Singapore.
If the loan amount offered to you sounds too good to be true, it probably is: you are likely dealing with loan sharks instead of licensed moneylenders. As it stands, there’s seemingly no limit with loan sharks. After all, the more borrowers borrow from them, the more they can squeeze their borrowers dry.
Processing fees and other charges
If you don’t already know, the interest rate advertised is often just what consumers see on the surface. A savvy consumer will know to scrutinise the effective interest rate, which takes into account the processing fees. Some lenders may use the term ‘administrative fees’.
Processing fees vary widely when it comes to loans, even the best loans in Singapore. This rings true no matter whether you are taking a loan from the bank, licensed moneylender or loan shark (hopefully not!).
While you’re at it, consider the loan’s early repayment fee, late payment fee and overdue interest rate, too. These charges can all add up if you are not careful or aware of their existence.
How to tell which is the best loan in Singapore for you?
There’s no straightforward answer to this, I’m afraid. The best thing you can do for yourself — and your wallet — is to consider all of the above-mentioned and compare.
It pays to do your homework if you want to snag the best loan package most suited to your circumstances and earning ability. You can do so easily at CompareSing at no extra cost to you.
The best loans available to you may very well differ from the best loans available to that auntie living a few doors away or even that distant relative of yours whom you see once in a few years.