Whether you want to build your dream house or finance your children’s education, a personal loan proves to be the best option. In simplest terms, personal loan refers to the unsecured loan taken either from a licensed moneylender or a financial institution. As the name implies, it can be used to cover your financial requirements, such as medical purposes, wedding requirements, educational needs, house construction purposes, and other significant purposes.
One of the main drawbacks of personal loans is that its eligibility criteria are solely based on the borrower’s income, credit score, credit history, and repayment capacity.
Here’s a step-by-step guide to applying for personal loans:
1. Decide the Amount of Money You Need
Personal loans can cover all types of finance – be it small or large. However, you must take into consideration the current income and financial requirements to decide the amount to borrow.
One important thing to note is that the more money you borrow, the higher the interest rate you will have to pay each month. Therefore, you should calculate the total requirements and debt that could be managed before applying for personal loans.
2. Discover the Right Type of Loan
Personal loans can be classified into four types, i.e.,
- Unsecured personal loans
- Secured personal loans
- Medical loans
- Debt consolidation loans
Depending on your specific requirements, consider these options and choose wisely.
3. Select the Right Lender
The entire process of the personal loan application and its approval can turn out to be pretty complicated. Not only is it time-consuming, but it can be hard for beginners to apply for personal loans and get quick approval. This mainly happens when you obtain a loan from banks and financial institutions.
If you want your application to be processed at the earliest possible time, you must consider applying for a quick loan in Singapore from a licensed moneylender.
4. Check Your Credit Score
As mentioned before, the eligibility criteria for personal loans is solely based on your credit score. The better your credit score, the higher the chances your loan application will be approved. To be eligible to apply for personal loans, your credit score must be between 670 and 740.
As it is an unsecured loan, your credit score decides your approval chances. You might need to consider some other loan options if your credit score is lower than 600.
5. Consider Lender’s Requirement
Depending on the financial institution or the moneylender you choose, the loan requirement may vary. It is, therefore, essential to check the eligibility requirements of the lender before applying for the loan. The basic needs include credit rating, annual income, credit history, and debt-to-income ratio.
6. Collect the Document and Apply for Loan
You can ask the lender what documents are needed and arrange these documents for fast approval. This include details like your NRIC number, evidence of employment and bank statements.