Loan Application

Loan Guide

It is important to find the right type of loan when borrowing money. Here are some of the types of loans available from moneylenders and banks in Singapore.

Personal Loan

As a type of unsecured loan, a personal loan does not require the borrower to provide collateral to obtain funds. Personal loans are a popular option among borrowers because they have relatively low interest rates and they can be used for a wide range of different purposes.

The following are some of the advantages of taking a personal loan:

  • Fast Approval: As long as the borrower meets the criteria, a personal loan can be approved very fast, usually on the same day.
  • Flexibility: Borrowers have a lot of options when shopping for a personal loan. You can find different interest rates, varying term limits and credit limits that can go up to 6x your monthly income.

When shopping for a personal loan, there are many factors that can help to determine whether one specific loan product is right for the individual. The following are ​some things to consider when comparing personal loans:

  • Minimum Income: This is the minimum amount of yearly income the person must have to obtain a loan. As long as you make S$20,000 or more annually, you should be able to find a loan.
  • Credit Limit: This is the total amount the bank or money lender will allow you to borrow.
  • Interest Rates: This is the amount the borrower will have to repay in addition to the amount of capital borrowed. Remember to check the Effective Interest Rate (EIR) to get a more accurate picture of what you will have to repay.
  • Loan Tenure: This is the term of the loan. Check the minimum tenure to find the shortest term for a loan and check the maximum tenure to find the longest term for loan.
  • Processing Fee: This is a fee the lender charges to cover administrative costs.
  • TDSR: The Total Debt Servicing Ratio is a figure that represents the amount of debt a person has in comparison with their income. Lenders use this figure to determine the amount of your monthly income that is already allocated to repaying debts.
  • Credit Score: Your credit score is used by lenders to determine how likely you are to repay a debt. If your credit score is poor, the lender may charge more interest or refuse to lend money entirely.
  • Additional Fees: Beyond the interest and processing fee, borrowers should be aware of any additional fees. It is common for lenders to attach fees for late payments (e.g. late interest and late fee).

Payday Loan

A payday loan is a type of cash advance that a person can take when they need money to get them to their next payday. These are short-term loans that require no collateral and they usually come with high interest rates.

​Since they come with high interest rates, payday loans are usually recommended as an emergency measure to help the borrower pay expenses until they receive their next paycheck. As an example, a person’s car might breakdown, and they do not have enough money to pay for repairs. A payday loan could be a quick way to obtain the money needed to cover this expense.

While payday loans do come with high interest rates, they also have some benefits. The following are some of the benefits of payday loans:

  • Fast Cash: Payday loans usually have a fast approval process. Instead of waiting days for the approval of a bank loan, a payday loan can be approved in just a few hours.
  • Convenient: The approval process is also very simple.
  • Poor Credit: Payday loans do not have strict requirements on the borrower’s credit history. Even if you have a bad history with borrowing, you should be able to obtain a payday loan.
  • Rebuild Credit: By obtaining and paying back a payday loan, you can work toward improving your credit rating. By improving your record as a borrower, you could open up more lending options in the future.

A payday loan can be a good option for some borrowers, but you do not want to enter into the contract lightly. Before you accept a payday loan, there are a few things you need to consider.

  • Interest Rates: The interest rates on a payday loan are going to be high. Make sure to compare different lenders to find the best rate.
  • Contract: Read the entire contract before agreeing to the loan. Try to understand all of the terms in the contract and look for any additional fees that will be attached to the loan.
  • Repayment: The idea of a payday loan is that it is quick cash that the borrower has to pay back in the near future. You have to consider your ability to pay the loan back on time.

Foreigner Loan

For some foreigners, there is the option to obtain a personal loan from a bank. However, banks impose strict eligibility requirements on foreigners who are trying to obtain a personal loan. For this reason, most foreigners turn to foreigner loans offered by licensed moneylenders.

A foreigner loan is a way for a foreign individual to obtain cash in a way that is quick and convenient. These loans can be secured or unsecured, and the approval process is usually very quick – with many lenders offering approval in less than a day.

This type of loan can be valuable to a foreigner who is in urgent need of funds. If you are a student studying abroad or a professional working abroad, a foreigner loan can help you cover a range of different expenses.  The following are a few of the benefits of a foreigner loan:

  • Fast and Convenient: A foreigner can obtain cash quickly and with little hassle. If you need emergency funds, a foreigner loan is a good solution.
  • Easy Approval: Foreigners do not have to face the strict eligibility requirements that exist at banks and the approval process is generally very simple.
  • Versatile: A foreigner loan can be used for a wide range of purposes.

While a foreigner loan from a moneylender will be faster, more convenient and more accessible than obtaining a personal loan from a bank, there are some requirements. The following are some of the things that may be required when applying for a foreigner loan:

  • Proof of residency (Tenancy agreement, phone bill, PUB bill, etc.)
  • Work permit or passport
  • Payslips
  • Bank statements
  • Employment letter

The requirements will vary from one moneylender to the next, so it is important to understand the requirements before applying for a loan. In some cases, you may be able to begin the application process over the phone or on the internet. Once your information is reviewed, a representative from the lender will contact you to schedule an in-person meeting.

The following are a few things to consider when looking for a foreigner loan:

  • The lender: You should only borrow money from a licensed moneylender.
  • The Interest Rate: Interest rates can vary significantly from one lender to the next. Make sure to compare your options before making a commitment.
  • Secured or Unsecured: A lender will be more likely to offer a higher credit limit for a secured loan. However, if you borrow too much and have trouble paying it back, you could lose your collateral.
  • The Contract: By law, a licensed moneylender has to explain the contract and all of the fees to the borrower. Pay attention when the contract is being explained and take the time to read the contract on your own. If you do not understand anything in the contract, ask the lender to explain it again.

Bridging Loan

Banks offer bridging loans to help buyers bridge the gap in the funds they need to purchase a property while they wait for the sale of a property they currently own. These loans can be used for both commercial and residential property, and they usually cost more than conventional financing.

Most bridging loans are secured with the property for sale acting as the collateral to secure the loan. This means that the property used as collateral could be seized by the bank if the payments are not made on time.

Bridging loans are advantageous because they help the borrower obtain the funds they need to purchase a new property while they await the sale of another. If a family is looking to buy a new home, this means they do not need to risk losing the house they want while they wait for the proceeds of the sale of their old house.  The following are a few of the benefits of a bridging loan:

  • Quick approval: If you are bidding on a piece of property, fast access to cash can make a big difference.
  • Flexible options: Many banks offer bridging loans with tenures of up to 6 months. Furthermore, you can have options to make monthly payments or to pay the total cost of the loan when the property sells.
  • No Mortgage: If you can’t get a mortgage on a property, a bridging loan can be a good option for funding the purchase.
  • Investment properties: If you are buying property as an investment, a bridging loan can be a good option.
  • Simple: Bridging loans usually process faster than other types of loans and they also require less documentation.

A bridging loan can be a good way to get the capital you need quickly, but there are some things you should consider first.

  • Cost: Since this is a short-term loan with higher risk, a bridging loan will cost more than traditional financing options.
  • Plan: You should have a plan to sell the property and repay the loan before agreeing to a contract. A bridging loan can result in a range of financial issues if it is not handled properly.
  • Repayment: With many bridging loans, you will need to make payments on the loan as well as the mortgage on the new property. If you cannot afford both at the same time, this might not be the right option for you.

Business Loan

It can be difficult for small businesses to obtain the capital they need. With a business loan, business owners have access to a range ​of lending solutions that can help them to meet the financial demands of their business.

Financing is one of the key challenges for many business owners. Depending on the type of business and the purpose of the loan, there may be a range of options available to the borrower. The following are a few of the reasons you may seek a business loan:

  • Capital to Start a New Business
  • The Purchase of Inventory
  • Debt Consolidation
  • Temporary Cash Flow Problems
  • Disaster Recovery
  • Business Expansion

Businesses have several options when it comes to obtaining a loan. One option is to apply for a business loan at a bank, but there are also licensed moneylenders who specialize in lending money to businesses. Businesses can also choose between secured loans and unsecured loans.

Whether it is from a bank or a licensed moneylender, the business owner will need to provide a full accounting of the business’s financial records. With a view of the financial state of the company, the lender will be able to assess the business’s needs and determine the level of credit that is appropriate.

Many lenders also offer repayment options that are designed to meet the needs of the business. With an assessment of the financial records, the lender may be able to identify periods of low income for the business. With this knowledge, they can then arrange a repayment schedule that is suited to working around periods of low activity, with more of the payments being made during periods when the business has more income.

The following are a few things to consider when looking for a business loan:

  • Type of Lender: For some businesses, going with a bank might be the better option. However, if you need the funds fast or cannot obtain a loan from a bank, a licensed moneylender might be a better option.
  • Type of Business: Some businesses might be eligible for loans that are specifically designed for their industry.
  • Terms of the Loan: When searching for a loan, it is important to consider factors like the interest rates, the tenure of the loan and if the lender can create a payment schedule that works for the needs of the business.
  • Business Needs: It is important to only borrow for necessary expenses or for things that will add value to the business. Before applying for a loan, evaluate the needs of your business.