Finally, we have wrestled down the COVID-19 pandemic because vaccines are already available, but people have been left with serious financial challenges. After a long period out of work or with reduced pay, many people in Singapore are looking for low-interest personal loan in Singapore to get back on their feet.
However, getting such low-interest credit is never easy, and some are having their applications rejected because of issues like poor credit score. So, what is the best way to get a low-interest rate personal loan in Singapore?
Keep reading to learn more about personal loans in Singapore and the best strategies for securing the credit at the lowest possible interest rates.
What is a Personal Loan?
A personal loan is a form of credit advanced by a lender to a borrower in a lump sum and then repaid in installments. As the name suggests, a personal loan is borrowed for personal reasons. This is why the money is deposited into the borrower’s checking account.
Another important attribute of a personal loan is that it gives you absolute freedom on how to use the funds. This means that a personal loan is open, unlike a car loan or renovation loan, where funds are tied to specific uses. So, if you are a Singaporean and only wanted a personal loan to get the business back on its feet but now prefer purchasing a home asset, the lender will not come asking questions about it.
We also have to indicate that a personal loan is an unsecured form of credit. So, you will not need to have collateral to secure the loan.
How to Secure a Personal Loan with Low-Interest Rates
When making your application for a personal loan in Singapore, there are two main types of interest; advertised interest rate and annual percentage rate (APR). The advertised interest rate is the percentage that you will get most banks emphasizing in their ads. However, this rate is only used to calculate the amount you pay based on the principal. Therefore, it is not the best way to identify low-interest rate personal loans.
Instead of using the advertised rate, you should work with APR. This rate is calculated just like the advertised rate, but it also factors in other payment requirements for the loan. For example, if the personal loan attracts an administration fee or other charges, they will be included when calculating the APR. Note that the rate is calculated on a yearly basis.
Once you have understood the main types of interests charged on a personal loan, it is time to get into finer details of the loan. So, here are useful strategies to help you enjoy low-interest rate personal loans.
- Ensure your credit score is good: The interest rates that lenders attach to personal loans in Singapore largely depend on the borrower’s credit score. To enjoy low interest personal loans, it is paramount to ensure your score is good. So, target to improve your score to the highest possible point, preferably as close as possible to 2,000.
- Negotiate for better rates: Although many people rarely use this channel to get better rates, it is indeed possible. If a lender is offering you a personal loan in Singapore with an interest rate of 5.1%, it might be possible to negotiate that downwards. Simply ask the bank for a review, and a drop, even if it is just 0.5% or 1%, might have a considerable impact on the amount payable by the close of the loan term.
- Only work with lenders having low-interest rates: When lenders advertise personal loans in Singapore, they have varying interest rates. Therefore, you need to compare them and single out the one with the lowest interest. For example, online moneylenders usually have lower interest rates compared to conventional banks in Singapore.
- Use loan comparison sites: This is probably the simplest yet straightforward method of pinpointing the lender with the lowest rates. Loan comparison sites, such as Lendela, forward your loan application to different lenders, making it easy to see the ones with lower interest rates. They also make the process of application easy and help borrowers to avoid loan sharks or ah-longs.
When looking for a low-interest rate personal loan in Singapore, the tips we have brought out in this post are all you need. Remember that no matter the interest rate of the loan, it is paramount to have a clear repayment plan. This will help you to avoid defaulting and causing damage to your financial health.
