Do You have an emergency, or do you have a particular financial goal that you want to achieve before the year ends? You can apply for a personal loan in Singapore to get enough finances.
But before you send your loan application, you should ask, ‘what do you need to apply for a personal loan?’ When you understand what lenders require, you will meet the eligibility criteria. As a result, your loan application will go through.
Keep reading this article to learn what a personal loan is and how it works, the options available, how much you can borrow, and the documents required.
What Is A Personal Loan And How Does It Work?
A personal loan is an unsecured loan you take from a lender to meet your needs. You do not provide collateral to acquire the best loans for your personal needs.
When applying for a loan, you should understand how it works. You borrow a certain amount of money for a personal loan, then repay.
It is important to note that you don’t pay the same amount you receive from a lender. Instead, you return the principal amount, interest, plus other additional charges. You have to pay the total amount within the agreed loan tenure.
Also, most of these loans have a fixed repayment period and interest rates. The interest rate does not change for the entire loan period.
You pay a personal loan in installments for the months or years you have agreed.
Lastly, most personal loans are amortised – the installments you make cover the interest and the principal amount. Therefore, the outstanding loan balance lowers the more you make the repayments.
Types Of Personal Loans In Singapore
Are you applying for a personal loan in Singapore? You can borrow any of the following loans:
Personal Installment Loan
Personal installment is one of the best loans for personal needs. It allows you to borrow a lump sum of cash from a lender to cater to emergencies or needs such as weddings.
The lender expects you to pay the loan in installments. For example, depending on your financial capability, you can agree to pay weekly or monthly.
Debt Consolidation Plan
This is an excellent option if you have multiple unsecured loans from different lenders. It allows you to amass your debts under a single loan and financial institution.
However, not all your unsecured loans are covered by a DCP. Loans such as joint accounts, education, renovation, medical and credit facilities for business purposes are excluded.
Bank Transfer
It is another best option for a personal loan to apply for if you have outstanding debt, such as credit card bills. With a bank transfer, you can combine them into one place. This makes repayment manageable, and you will have a fixed monthly amount to pay.
Credit Line
A credit line is also referred to as a revolving line of credit. You can borrow money from whichever source with it at an annual fee of $60 to $120.
And how much can you take in Singapore? The maximum amount you can borrow from your revolving line of credit depends on your monthly salary.
How Much Can I Borrow?
Knowing how much you can borrow is crucial as you inquire about what do you need to apply for a personal loan.
So, asking, ‘how much can I borrow for a home loan in Singapore?’ simplifies the borrowing journey.
The maximum amount of CPF personal loan you can get depends on how much you earn per year. Also, your citizenship comes in handy.
Singaporeans and permanent residents need a minimum annual income of $30,000 to apply for the best personal loan. If you are a foreigner, the amount is at least $40,000 to $60,000.
You can still get a personal loan if you earn less than $30,000 from some financial institution. However, such lenders can charge you a higher interest rate.
Here is a table to help you if you are asking, ‘how much can I get from a bank?’ depending on your annual income and citizenship:
| Your Annual Income | Singaporeans And Permanent Residents | Foreigners Living In Singapore |
|---|---|---|
| Below $10,000 | $3,000 | $500 |
| At least $10,000 but less than $20,000 | $3,000 | $3,000 |
| At least $20,000 and above | 6x your monthly salary | 6x your monthly income |
What Documents Do You Need To Apply For A Loan?
Lenders in Singapore will require you to provide the necessary documents when applying for a loan. Without them, your application cannot go through.
Here are the documents you should have to get the lowest interest rate personal loan in Singapore:
Identification Card Copy
Financial institutions will ask you to provide a copy of your identification card. In this case, you can give your NRIC or Employment Pass. This is to help a lender to confirm your legal and eligibility status.
Proof Of Income
As stated earlier, the question of ‘how much bank loan can I get?’ depends on your annual income. Therefore, a bank will need to know the amount of money you earn.
You can provide the following documents to prove your income:
- A statement of contribution towards your CPF
- Your latest computerised payslip
- Your latest income tax Notice of Assessment
- A bank statement reflecting salary crediting into your bank account
- Any other income document required
Employment Documents
A lender will request your employment details, such as the CPF statement or Employment pass. Also, it can ask for documents such as a job offer letter, employment contract, and salary details.
Proof Of Address
You need to provide a document with your residential address, such as utility bills.
What To Consider Before Applying
Before applying for the best loans for personal needs, you must consider some things. This will help you secure a loan with the lowest interest rate and other reasonable terms and conditions.
They include:
The Interest Rate
Lenders provide personal loans at different interest rates. Besides, you will find two rates attached to a loan- the applied rate (AR) and the effective interest rate (EIR).Compare both rates.
Usually, the actual cost of a loan depends on the EIR because it factors additional loan cost, the loan tenure, and the frequency of the installments. Therefore, as you ask, ‘how much can I loan from a bank?’ check on the loan’s interest rates.
Loan Fee And Charges
Apart from the interest rates, a CPF personal loan has additional charges. Therefore, you should familiarise yourself with them to choose the best deal. Some of the fees include the following:
Late payment – This is the fee you will incur when you do not repay your loan on time. The amount of this penalty depends on your lender. However, if you have borrowed from a licensed money lender, it should not be more than $60 per month.
Annual fee – Also, be alert of the annual fee charged by some lenders. The amount can be fixed for the entire loan tenure. This means if you will pay your loan for four years, you will pay four annual fees on top of the interest.
The Purpose Of The Loan
Why do you want a loan in Singapore? Before submitting your loan application, plan how you will use the money you will receive.
You can use a personal loan to do whatever you want. But remember that a loan is not free money. Instead, you will have to pay back. Therefore, you need to know how you will use every single coin. For example, you can take it to pay off a high interest debt.
The Lender You Are Working With
Finally, know about the lender you want to borrow from because it matters. You need to find a financial institution that is licensed and allowed in Singapore.
You can determine if a lender is allowed to operate in Singapore by checking on the list of licensed money lenders provided by the Ministry of Law. This is because if you work with a loan shark, it can overcharge you.
Requirements For Getting A Personal Loan In Singapore
When applying for a personal loan, there are requirements that you need to fulfill. You cannot qualify for a loan if you do not meet them. Therefore, you should understand what do you need to apply for a personal loan.
First, you should have a document such as your NRIC to prove your identity. Second, confirm your income with a contribution statement to your CPF, your latest payslip, and a bank statement. Third, your lender will need proof of your address and employment details.
If you have these documents and are looking for the best personal loan, contact Credit 21. We are a reliable financial institution processing personal loans within the shortest time possible. You only need to visit our official website and apply for a loan.
