In Singapore, a personal loan might be a good solution if you need a large sum of money quickly and have the ability to pay off the loan within one to five years. You may already have been considering for quite some time when to get a bank loan for your financial need. But before you apply for a bank loan, it's important for you to understand a bit more about personal loans.
A personal loan is money lent out by a bank to one person for a specific amount of time, usually no more than 5 years. If you meet the requirements, you can take out a personal loan without providing securities such as a home or car that could be possessed by the bank if you fail to repay the loan. Here, we at BestCreditCards.sg will share with you how you can approved for a personal loan in Singapore:
How To Be Approved For A Personal Loan
A steady job
You will have to show that you have a reliable source of income and prove how much you earn. If you are self-employed, you will have to prove your income by providing your Income Tax Notice of Assessment for the past 2 years.
Earn $30,000 or more annually
If you earn $30,000 or more each year, you can get a personal loan equal to 4 times your monthly salary. For example, if you earn $5,000 a month, you can borrow as much as $20,000. If you earn less than $20,000 a year, then the highest loan you can get is $3,000.
Be 21-65 years of age
You will have to be at least 21 years old to obtain a personal loan. After you turn 65, you will not be able to get a personal loan. If you do take out a loan before you turn 65, you will have to pay it back in full before your 65th birthday.
Be a Singaporean citizen or a permanent resident
Foreigners with a work permit may be able to obtain a personal loan from certain banks if you can prove an income of at least $40,000 a year.
Have a debt servicing ratio which does not exceed 50%
That means that all of the repayments that you are making on all your loans each month combined should not be more than half of what you earn every month.
If you are considering applying for a personal loan, then you will want to make sure that you have the necessary paperwork. As a Singapore citizen, you should have your NRIC, salary slips, recent bank account statements, your CPF contribution history statement for the last 12 months and the track record of your tax form on hand.
If you are a foreigner, make sure you also provide the necessary visa form such as your permanent residence documents or work permit. Preparing all of your documents before you apply will make the whole application process easier, faster and more efficient.
Most banks offer personal loans, but before you make your application, we suggest you compare personal loans from many different banks in Singapore and find the personal loan that best suits your individual needs. Interest charges for personal loans vary from around 6%-10% per year, and tenures (the time you have to pay back the loan) range from 1 to 7 years.
You can compare and find personal loans here at BestCreditCards.sg, where we show you the interest rates of loans offered by many banks in Singapore.
If you can afford to repay the loan in full within a certain period of time, then you should consider choosing the shortest tenure available, as by doing this you can avoid paying unnecessary interest charges. Here are 3 things to know before getting a personal loan.