We live in a world where unfortunately the most vulnerable sections of society have a scarcity of options. With the current banking systems and the stringent conditions for personal loans in Singapore, it often becomes difficult to get personal loans for normal-income earners from most financial institutions.
However, even though it may seem tough, there are licensed money lenders in Singapore who are making it possible for normal income earners to get personal loans. After all, the option to apply for a personal loan shouldn’t be available to a select few but, to every resident of Singapore. Most of the time, normal-income groups are not even aware of the options they have when it comes to applying for a personal loan.
Personal loans are usually considered unsecured loans as people don’t pledge collateral against such loans. Therefore, when you apply for a personal loan, you don’t have to provide an asset as collateral for the repayment. Thus, lenders like banks and licensed moneylenders have a greater risk exposure with personal loans, which makes it an uphill task to get approval for a personal loan. Hence, the institution relies on a person’s credit rating to assess how suitable or safe it is to give a personal loan to the applicant. When you apply for a personal loan in Singapore, if your income is low or you have a poor credit rating, chances are that most lenders would be unwilling to give you a loan.
The cycle is quite a vicious one as the best way to improve one’s credit rating would be to borrow money and then repay it on time. However, there are select licensed moneylenders in Singapore who consider multiple factors while screening those who apply for personal loans.
Typically, the eligibility of a person is determined by their income, credit history, bank statements, and other factors, which is why many Singaporeans often think that personal loans for normal-income earners are a far-fetched reality. However, it is fairly easy for people from normal-income groups to be eligible for a personal loan provided they have the right reasons for it.
Personal Loans For Normal Income
There are multiple ways through which personal loans for normal-income earners can be made possible. People who have additional sources of income (such as part-time jobs in a coaching class) can declare their additional source of income. Typically, these are the sources of income that a moneylender would consider while determining your credit eligibility:
- Child support payments
- Insurance payments
- Dividend on shares
- Interest on investments
- Government benefits such as the COVID-19 benefits offered
These will reveal that you can earn enough to repay the loan even if your main salary is lower. A moneylender would take into account the combined earning from all steady sources of income while calculating your loan eligibility. Thus, you must carefully declare them all when you apply personal loan.
Your bank balance is also an important factor. If you keep a steady bank balance over time, even if it is a smaller amount, it will indicate that you are capable of saving money and are a responsible person.
Another highly effective option is to get a cosigner when you apply personal loan as it can help the two people share the repayment burden and makes loan approval more likely. Also, if your co-signer has a good credit rating, then it will also be a key factor in helping you when you apply personal loan.
How To Apply For Personal Loan In Singapore
For regular earners, it is easy as you can simply apply online -just fill in your details on the lender’s website. The customer service team then contacts the applicants and the loan application process is started.
If you earn a normal income and need a personal loan, you would need the following documents when you apply personal loan:
- National Identity Card
- SingPass login to CPF and IRAS
- Proof of income for the past 3 months (if you have a steady income that is higher than average then you would be able to get better deals such as lower interest rates on your personal loan in Singapore).