Personal Loan

Do Personal Loans Hurt Your Credit?

A personal loan is an unsecured loan which is a short to medium which gives the ability to compensate for the present financial needs. It is also called as “All-purpose loan” at times as it has no restriction on the end of funds.

The borrower may use a personal loan for many reasons like emergency medical expenses, sudden death- funeral expenses, debt consolidation, vacations, educational fees, buying new furniture for the home, etc.

When you take a personal loan Singapore makes sure you are beneficial in improving credit scores. When you fail in maintaining a credit score, it may cause a problem for the future loan.

Why go for a Personal Loan?

Personal loans are flexible; it helps to meet your financial needs without any stress. The following are the main reasons to choose a personal loan in Singapore.

  • Debt Consolidation- When you have more debts, and you are stuck in paying loan this debt consolidation process help to consolidate your debts or expenses on time.
  • Quick Approval- When the customer maintains a good credit score, the minimal document is enough for fast processing. The loan will be disbursed in a matter of minutes.

A personal loan is an unsecured loan that helps an individual to get instant cash, whereas a Secured loan takes time, as the collateral or assets need to be pledged as per the government norms, where it takes time.

  • The flexibility of Use- Since the Lender provides personal loan for personal purposes, there is no monitoring of the end-user. It is flexible to use the loan for any type of expense.
  • Unsecured Loan Type: Personal loan is an unsecured loan, where the customer needs to submit any collateral or security to the lender. At the same time, there is no need for a guarantor sign to get a personal loan.
  • Improve Your Credit Profile: Personal loan Singapore is another line of credit added to your credit score. When a customer makes the repayment schedule on time, his credit score will be improved automatically.

Factors to be considered for a personal loan

  • Credit Report: As a personal loan is an unsecured loan, the lender will evaluate the credit history before approving the loan. For a personal loan, credit report, credit history, and profile are essentially important.

A high credit score increases the chance of fast loan approval. A good re-payment history provides additional loans in the future. Hence the customer must show interest in taking the personal loans and also to the repayment on time.

  • Employment Status: The loan amount will be sanctioned to the applicant as per the individual nature of work and his annual income. As personal loans are an unsecured loan, the lenders will check the applicant’s annual income through payslip and his job nature.

An applicant who frequently changes his job and place may not be considered as an ideal case for his loan approval. When a person has a good credit history, a good re-payment history, and valued reason for the change of job or place has a better chance to get a loan instantly.

  • EMI and Tenure: It is important to maintain credit history and credit report to avail Personal Loan Instantly. As the loan is for emergency purposes, the applicant must consider the EMI and tenure for the re-payment schedule to save his future credit report.

Loan for Foreigner or Singaporean

As the personal loan is common for all individuals but the sanctioned amount will differ based on a foreigner, Singaporean, employed, self-employed, taxi/cab driver. The entire amounts are subjected to a Credit score.

For foreigners:

If the annual income is from $10,000 to $20,000 then he is eligible for a loan of up to $3,000.

If the annual income for foreigners is less than $10,000, then the customer is eligible for a loan of up to $500.

 For Singaporeans:

If the annual income is less than $20,000, the customer is eligible for a loan of up to $3,000.

If the annual income is at least $20,000, then the customer is eligible to avail 6 times your monthly income.

For a Cab/ Taxi driver, the loan amount will be allotted as per the bank norms and his credit history. The repayment options are flexible for any type of customer. It can be range from 12-60 months.

Processing Fees

  1. When an individual applies for a Personal Loan Singapore, the processing charges typically vary from 2-3% of the loan amount based on the money lender’s norms.
  2. When an applicant plan to pre-close the loan before the tenure, the nominal pre closing charges will be charged from the customer. It may vary from 2-3% based on the lender. The pre-close method helps to maintain a good credit history.

Personal loans will never hurt your credit score unless you haven’t paid on-time. So, repay properly and get more loans for your future needs. Learn more about MoneyIQ – instant cash loan guide.

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