As the cost of living in Singapore have been going up steadily every year, many of us could be caught offside when some insistent matters unexpectedly surface that require cash. In such cases, it's cash that you may not have but you really need to have.
So you choose to borrow money. Instead of encroaching on family, relatives and buddies, you turn to banks and licensed moneylenders for a private loan.
Lending standards for banks and licensed moneylenders:
- For annual salary of S$30,000 or more, you can make an application for credit facilities that grant you credit up to 4 times your monthly salary;
- For yearly salary between S$20,000 to S$30,000, you can borrow up to twice your monthly pay;
- For annual income below S$20,000, you can only borrow up to S$3,000 from approved moneylenders at maximum 18% interest per annum;
- To borrow from banks, you've got to have a clean credit report, as it is the first criteria they look at. So if you haven't been frequently servicing your credit card bills or your hire purchases, then you're disadvantaged.
But it is kind of tough to borrow from licensed moneylenders, as they are not standardised in their dealings. Every one of the 243 approved moneylenders (as of 1 Feb 2012) has its own set of T&Cs for loans, and personal loans are the most well-liked in their business.
Things to do before seeing any licensed moneylenders:
- Budget your monthly take home income and whittle it down to your expendable amount after accounting for all of your financial liabilities;
- Derive the amount you can repay in full each month from your dispensable amount, having set aside some cash for savings.
Things to ask the approved moneylenders:
- The amount you wish to borrow and whether they can give you;
- The rate of interest and how it is calculated;The repayment period;
- Any other extra costs and charges that will apply.
Things to consider in picking the preferred moneylender:
- The repayment amount matches or is less than your worked out repayment amount;
- Understand all the terms and conditions that the moneylender put forward;
- The moneylender's demeanour and approach.
Things to notice when signing the contract:
- The contract's content matches the verbal reason by the moneylender;
- The contract lists properly the principal loan amount, the IR, the repayment period and the repayment sum due monthly;
- The moneylender passes you the full loan amount as agreed without subtracting any amount for any fee, if any, must be told to you earlier;
- You are warranted you'll get a dated and signed receipt for each repayment and/or costs, as well as a half-yearly statement from the moneylender.
On your side, you must:
- Promptly repay all monthly payments;
- If at all possible, pay back your principal amount earlier, if there's no clause in the contract that restricts it;
- Keep all receipts and statements of account for future clarification if necessary.
Do not borrow more than you can repay, and keep to your payments strictly.
So you choose to borrow money. Instead of encroaching on family, relatives and buddies, you turn to banks and licensed moneylenders for a private loan.
Lending standards for banks and licensed moneylenders:
- For annual salary of S$30,000 or more, you can make an application for credit facilities that grant you credit up to 4 times your monthly salary;
- For yearly salary between S$20,000 to S$30,000, you can borrow up to twice your monthly pay;
- For annual income below S$20,000, you can only borrow up to S$3,000 from approved moneylenders at maximum 18% interest per annum;
- To borrow from banks, you've got to have a clean credit report, as it is the first criteria they look at. So if you haven't been frequently servicing your credit card bills or your hire purchases, then you're disadvantaged.
But it is kind of tough to borrow from licensed moneylenders, as they are not standardised in their dealings. Every one of the 243 approved moneylenders (as of 1 Feb 2012) has its own set of T&Cs for loans, and personal loans are the most well-liked in their business.
Things to do before seeing any licensed moneylenders:
- Budget your monthly take home income and whittle it down to your expendable amount after accounting for all of your financial liabilities;
- Derive the amount you can repay in full each month from your dispensable amount, having set aside some cash for savings.
Things to ask the approved moneylenders:
- The amount you wish to borrow and whether they can give you;
- The rate of interest and how it is calculated;The repayment period;
- Any other extra costs and charges that will apply.
Things to consider in picking the preferred moneylender:
- The repayment amount matches or is less than your worked out repayment amount;
- Understand all the terms and conditions that the moneylender put forward;
- The moneylender's demeanour and approach.
Things to notice when signing the contract:
- The contract's content matches the verbal reason by the moneylender;
- The contract lists properly the principal loan amount, the IR, the repayment period and the repayment sum due monthly;
- The moneylender passes you the full loan amount as agreed without subtracting any amount for any fee, if any, must be told to you earlier;
- You are warranted you'll get a dated and signed receipt for each repayment and/or costs, as well as a half-yearly statement from the moneylender.
On your side, you must:
- Promptly repay all monthly payments;
- If at all possible, pay back your principal amount earlier, if there's no clause in the contract that restricts it;
- Keep all receipts and statements of account for future clarification if necessary.
Do not borrow more than you can repay, and keep to your payments strictly.
About the Author:
Ivana Hung works in a reputable group of banks and provides advice on loans and the way to apply loans.
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