Getting a money loan in Singapore is relatively convenient, thanks to our well-developed and keenly regulated financial sector. But while there are many options available to borrowers, it’s important to know that not all loans are equal.
Indeed, you’ll find a wide range of loan packages with different terms, eligibility requirements, and interest rates, offered by a variety of lenders, each with its own characteristics.
It is crucial to choose the right money loan and lender, otherwise, you may risk impacting your financial health down the road. To help you make the right choice, consider these three factors when choosing a loan.
1. Is the lender licensed?
Despite Singapore’s tough regulations and tight control, incidences of illegal moneylending by unlicensed parties still take place.
There’s a clear difference between licensed and unlicensed moneylenders — with the latter being the ones you should avoid. Borrowing from an unlicensed moneylender will open you up to all sorts of trouble, including harassment and intimidation, overcharging, and unreasonable interest rates.
As such, borrowers should be extra vigilant, and ensure they only borrow from licensed moneylenders. This is critical when you’re seeking a quick cash loan; in your haste, you may inadvertently take an illegal loan and then face serious consequences of dealing with loan sharks soon after.
You may think that you can avoid illegal lenders by simply taking an online loan from a bank. But not all borrowers are able or willing to fulfil bank loan requirements, which leaves licensed moneylenders as the next best option.
Also, the prevalence of online loans can cause borrowers to let their guard down. They may become more open to loan offers coming from alternative channels such as social media and messaging platforms – which are known breeding grounds for illegal loans.
The key thing to remember is that no matter where you choose to get a loan from, it’s best to always check that you are borrowing from a properly licensed lender.
Banks and financial institutions in Singapore are generally safe choices, but before using a moneylender, be sure to verify against the MAS list of licensed moneylenders to ascertain you’re dealing with a registered entity.
2. Does the loan fit your financial needs?
The purpose of a money loan in Singapore is to meet a financial shortfall, but that doesn’t mean just any loan will do.
Take, for example, personal loans. They are well-suited to a wide range of uses, including home renovations. However, banks also offer renovation loans that can cover your needs just as well as a personal loan – while doing so at lower interest rates. This means that you can potentially lower your cost of borrowing if you use a renovation loan instead.
Another example is an education loan from a bank, which may have lower interest than a personal loan, and a longer loan tenure of up to 8 years, making it easier to repay.
Different lenders also have different requirements. For example, while banks can offer loans with lower interest rates, they also have stricter eligibility requirements, including income level and good credit standing.
In contrast, licensed moneylenders require only minimum credit checks when processing your money loan application. They are also able to grant loans to low-income earners, although, by law, the loan amount is limited according to your income level.
The catch is licensed moneylender loans have higher interest rates compared to bank loans. Often, the loan tenure is also shorter, typically up to 12 months, though a few lenders might grant you a loan tenure of up to 24 months.
Hence, it is imperative to understand your own financial needs and circumstances when choosing a loan, so you can better discern which loan you should take and which lender you should approach.
3. Are you able to repay the loan?
First of all, you have to understand how loans and credit work before getting a loan. Then, it is imperative that you consider your ability to pay off your money loan so that you do not create a debt trap for yourself.
You see, should you fail to keep up with the loan repayments, you will incur additional interest charges and penalty fees for late payments. All these will quickly snowball, causing you to get even deeper into debt.
One rule is to only borrow what you need, instead of taking on a larger loan “just in case”. A smaller money loan will be easier to pay off than a larger one.
Another way to manage your money loan in Singapore is to choose a loan tenure that allows a comfortable pace of repayment. If repaying your loan over six months makes each monthly payment too high, choose a longer tenure to lower each instalment payment.
A third tip is to pay off your existing loans before taking on new money loans. This way, your loan repayments will be easier to track and you will be less likely to overburden yourself.
If you have several financial needs to meet, prioritise the most urgent one first and slowly work your way down.
Licensed money loans to meet your needs
Synergy Credit offers flexible money loans in Singapore, tailored to your needs. Our loan packages are quick, convenient, with minimal credit checks and no high annual income requirements. Ask our friendly team about our 20-minute loan approval today.
