At times, people are in urgent need of a loan to address their short-term monetary requirements. However, banks do not want to give loans to people who have poor credit scores. And, even if they do, they charge high rates of interest. To help you out, we will tell you how to get a low interest loan Singapore.
If you need a low interest loan in Singapore, you must understand the difference between the following.
- Interest Rates
You will notice different interest rates. It is because personal loans depend on the amount that you want to borrow, the length of time that you need to borrow the money, and who you are. After submitting a loan application to a bank, they personalise their interest rates for you, and you will see the final rate of interest once you get approval for your loan application.
It is the Effective Interest Rate, and it refers to the borrowing cost, and it considers other kinds of fees such as the schedule of loan repayment and the processing fee.
- Processing fee
It is the hidden cost of personal loans. The processing fee will get deducted from the principal.
How can I increase my chances of getting a personal loan in Singapore with low interest rates?
- Checking the credit score
Your credit score refers to your ability to repay your loan. The higher the credit score, the more your chances will be of getting your loan approved. It is advisable to get a loan when you have a credit score above 750. In case you have a low score, it is better if you wait before going forward with a loan application. You can work on improving your credit score by paying the existing debt off, paying timely bills, and not maxing out on your credit cards.
- Keep a minimum gap of six months between your loan applications
You need to keep a minimum gap of six months between your loan applications. Your lender will otherwise think that you will not be able to repay the loan on time. In case you don’t need a personal loan urgently, you can wait for a few months to increase your chances of getting your personal loan approved.
- Understand your debt to income ratio
You need not spend more than 40 percent of the income towards your EMIs. So, if your income is around 25,000, you must not pay more than 10,000 as your EMI. The monthly debt divided by the gross monthly income is the debt to income ratio. Keep this debt to income ratio low at all times.
- Do not apply for several loan applications
Do not make several loan applications to different money lenders. People tend to make this mistake to get their personal loan application approved by anyone money lender in Singapore. But, this creates a bad impression upon these lenders as they start to think that you require more than one loan for the purpose of meeting your expenses. Moreover, your credit score will reduce if you do not get loan approvals, which will make it hard to get approval for any type of credit in the future.
- Selecting the money lender in Singapore
Before selecting a money lender in Singapore to get a personal loan with a low interest rate, make sure to compare the loans and the interest rate that are offered by different money lenders. Even if you get a money lender who can provide you with a personal loan with a low credit score, you need to be careful. Title and payday loans will always ensure that you remain in high debt with high fees.
- Check the eligibility criteria
Be sure to review all of a lender’s requirements before choosing one. By doing this, you can prevent the unfortunate situation of being rejected for unimportant factors like age or money.
- The right amount of loan
To get your loan application approved, you need to apply for the right amount. Before you head to apply for a loan, use a personal loan eligibility calculator to check on the amount that you are eligible for based on the income that you earn, your current liabilities, and other factors.
If you need to get a personal loan with a low interest rate, you must take into consideration the above things. For instance, while applying for consecutive loans, you must keep a minimum gap of six months. Otherwise, it can give the wrong impression to the money lenders and decrease your chances of getting a personal loan with a low interest rate. You must know the debt to income ratio. Also, check where to apply for a fast personal loan in Singapore. This is because some money lender provides you loans at low interest rates but with a high debt risk for the future.