Types of Legal Loans in Singapore
Some people are good at managing their finances in life, but there are others that are perpetually in debt due to bad lifestyle habits. For this group of people, their creditability is most probably not good, hence if they were to borrow from banks, their applications will not be honoured.
For them, the only way to borrow legal loans, besides borrowing from friends and family, is to borrow from licensed moneylenders. As of February 2012, there are 243 licensed moneylenders in Singapore. These licensed moneylenders renew their licences yearly, and there are increasingly more of them getting their licences each year.
Most licensed moneylenders give out loans such as personal loans, payday loans, foreigner loans, etc. Depending on the amount you need and the repayment period on the interest, you have to decide the type of legal loan you want.
Personal loans are unsecured loans, meaning you borrow money without any collateral. The chargeable interest is rather high, depending on your income bracket, the loan amount and the period of repayment. Personal loans are usually mid-term to long-term loans, ranging from one month to a few years. Interest rates vary from moneylender to moneylender, and it is better to speak to a few before settling on the one that you will borrow from.
Payday loans are short-term loans, usually from a week to a month, or the next pay day, whichever is earlier. They are akin to cash advances, for people who over-spend and come up short between consecutive pay days. To tide them over, they can take out payday loans of small amounts, usually less than $500, though the interest rates are quite exorbitant. Borrowers must repay payday loans on time as agreed, in full principal amount plus interest. If the repayment is not made fully, there are very high late fees and/or penalty charges that are simply not worthwhile to service.
Foreigner loans are catered to foreigners working in Singapore. Being alone in a foreign country, there may be times that urgent need for cash is warranted. It is the same as personal loans, only the borrowers are non Singaporeans or Permanent Residents. Foreigner loans are not commonly available from licensed moneylenders, hence there is a need to enquire more of the moneylenders to find one that is best suited to your requirements. For foreigners wanting to borrow money from licensed moneylenders, they must produce proof of employment, usually a minimum of six months working in Singapore, proof of address and proof of personal particulars. Sometimes a local guarantor is needed for that extra security measure.
Borrowing money in Singapore from licensed moneylenders is best only for people with bad credit history. Unless it is really necessary, try not to borrow money at all. Budget your monthly take home salary and put aside a savings component of at least 10%. Accumulate your savings to minimum six months of your monthly gross salary, so that in case of any emergency or urgent need for cash, you have your savings to back up, instead of borrowing to tide over the rainy day.
Lena Yao is the author of this article. For more information about Licensed Moneylender, Payday Loans, Bridging Loan Singapore, please visit QuickCredit.com.sg.
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