In these unpredictable times, it can get quite stressful dealing with emergency expenses. You may be doing well with your finances at this point, but then there may come a time when your situation will change, thus requiring you to obtain extra funds for an expense that must be settled immediately. Moreover, you may have been eyeing that gorgeous car, or you plan on buying a house, yet you do not have sufficient funds for these expenses. Should you allow your limited source of funds to get in the way of your dreams?
This is why financial institutions offer a wide range of loan products including car loans and home loans, to name a few. There are also study loans and personal loans available to eligible applicants who need extra money for their tuition fee payment or immediate expenses. Now, as for personal loans, these are mainly used to cover bills that do not count as payment for your car, home, or tuition. These are more of personal expenses that are not too big enough, although you do not probably want to get some cash out of your savings since these are currently making more money from interest. But if you are planning on getting your car repaired, or you have utility bills to pay, yet your funds are insufficient, how can you possibly settle these expenses?
This is why it will be quite helpful that you look into another option to receive the extra cash you need. But at the same time, you may be a little hesitant to take out a personal loan because of the stringent policies that banks set for borrowers. You are probably uncertain if you can even qualify, so you may end up feeling hopeless about your chances of getting the funds you need.
There are several misconceptions that borrowers have when it comes to taking out a personal loan and payday loan. Although the process can be stringent and tough, it is not as difficult as it seems to be. This is why we are here to take a look at these misconceptions, so you can clear your mind and realize that it is not that difficult to borrow money from a licensed moneylender for your immediate financial concerns.
1. You must maintain a good credit score to qualify for a loan
It is true that your credit score and history both have an important role when it comes to your chances of being approved of a loan in Singapore. This is specifically applicable when you apply for a bank loan since they have high standards that borrowers must meet before the amount of money needed can be sent to them. Thus, those who may feel they do not qualify, or that they barely have any chance of receiving emergency funds from a lender may only get even more stressed because of this misconception.
But the thing is, there is still a way for you to get some cash in another route. While you may want to forget about applying for a bank loan, you can always look into the possibility of approaching a licensed moneylender in Singapore. Since there is a credit bureau separate from what banks have, licensed moneylenders generally have a more lenient policy when they review a potential borrower’s application. Your credit score will be taken into account, but a bad rating does not mean you are immediately disqualified from receiving a loan. This is why you have a low chance of being rejected, but with the exception of accumulating loans and defaulting on your payments. Hence, if you have been diligent in paying your debts off, then you should not despair or worry about being declined. You still have a chance, and all you need to do is to approach a reliable and licensed moneylender in the country who can help you with your concern.
2. There is just a single interest rate that lenders offer to borrowers
Once the time comes for you to pay your loan off, you need to settle not only the principal amount borrowed, but also the interest rate that is placed on top of it. This is why some borrowers are hesitant about applying for a loan because they assume that all moneylenders offer the same interest rates to people.
But you see, this is not the case at all. In Singapore, financial institutions try their best to make their rates as competitive as possible to attract more potential borrowers. Thus, there are lenders who offer cheaper and lower rates that are more ideal to the needs of their clients. Whether this may be a personal or home loan, lenders provide rates that vary.
It is also worth noting that the loan rates may depend on the applicants credit risk status. Based on your capability to repay your loan, the rates may be adjusted, as well. The same holds true if you have decided to present collateral, or you have a specific financial need that is different from other applicants. This is why you should never let this misconception get in the way of your need to obtain a loan from a reliable and legal source.
3. The lowest interest rate for a loan is always the best way to go
Is cheaper really better? The thing is, you should never zero in alone on the cheapest possible rate that a licensed moneylender offer. There are probably some lenders out there who may pride themselves with their lowest rate in the country. But at the same time, you should be wary of such because there is usually a catch to think about. Perhaps, the customer service is poor or the payment schedule is quite unreasonable. Hence, you may only find yourself in deep water if you even consider taking a loan out from such lender with the lowest interest rate.
Here is an example. Supposing you are planning on borrowing $5,000 from a moneylender, and your goal is to finish repaying it in just 3 months. Are you more comfortable about paying a little higher rate to meet your goal, or would you rather stretch the payment to 1 year and pay a slightly lower interest rate? Practically speaking, the shorter the payment term (even with a bit higher rate), the more money can you save along the way. The ultimate goal you should have when it comes to borrowing money is to shorten the duration of your loan as much as possible, so it will no longer accumulate interest that may only burden you further.
4. Only employed individuals can qualify for a loan
This is one major misconception that some people have, which stops them from going forward their goal of taking out a loan. Since they own a business, or they only make money from commissions, they assume that there is no chance for them to receive the amount they need by qualifying for a loan, specifically from a bank.
Sure, there are tough requirements set by banks for borrowers. But if you approach a licensed moneylender in Singapore, you have a higher chance of being approved of a loan because of less stringent eligibility criteria. In fact, there are certain schemes available to borrowers including the Business First Loan that is targeted towards new businesses and startups. This is a type of loan that does not involve collateral, and it is under SPRING micro loan programme in Singapore. The repayment period is flexible and may be extended to a maximum duration of 4 years. But, be sure to have a guarantor and maintain a positive financial status to have a better shot at qualifying for a loan.
As for those who plan on consulting a licensed moneylender in Singapore, you can still qualify for a loan even without a guarantor or collateral. You simply need to present to the moneylender your income tax statements, as well as a legal and valid proof of income as your paperwork to support your capability for loan repayments.