How to Choose Your First Personal Loan in Singapore

Choosing your first personal loan in Singapore can feel like being stuck in a maze, especially with hundreds of options. That said, you’re not alone. A lot of people who are just starting to get a handle on their finances find themselves asking how to choose your first personal loan in Singapore.

It’s a daunting idea, but when you’re armed with the right information, you can apply for a loan with confidence, even if it’s your first time.

Personal instalment loans are perhaps the most straightforward type of personal loan. It is a lump sum of money to cover a significant expense like a wedding.

For this loan, you borrow a fixed amount and repay it in equal monthly instalments over a set period ranging from a few months to five years. The interest rates for these loans can vary.

Also known as a revolving line of credit, this loan offers more flexibility compared to a personal instalment loan since you get access to a pre-approved credit limit, and you can withdraw funds only as needed. Because of this, the interest is only charged on the amount you use so it’s ideal for managing short-term cash flow issues.

For example, if you face a delay in salary, a credit line can help you pay your bills without incurring high-interest charges.

Here are specialised loans tailored for specific needs.

• Education Loans

As its name suggests, this loan is to finance your education. It can help with tuition fees. It can also be used for your living expenses. They typically offer lower interest rates and flexible repayment terms, making them an affordable option even for students.

• Medical Loans

Are you facing a medical emergency? Then apply for this loan to help you focus on your recovery.

• Car Loans

A lot of young professionals are looking for a loan to buy a new car, and this is the best financial product to get for this huge expense.

First-timers should always think about this factor especially when learning how to choose your first personal loan in Singapore because the rates can vary significantly between lenders. Remember that even a small difference can add up to a huge amount over the loan tenure.

Take time to compare the annual percentage rates (APRs) and effective interest rates (EIRs) across different lenders to find the most cost-effective option. Also think about any additional fees like processing fees or early repayment penalties.

Before you apply, ask yourself what is the exact amount you need to borrow and for how long you can handle paying it. Of course, it’s tempting to borrow the maximum amount but this also means higher interest payments.

A longer loan tenure can result in lower monthly instalments, but you’ll end up paying more interest overall. Find the right balance for you.

Your credit score, or lackthereof as a first-timer, determines the interest rates and loan terms offered by licensed money lenders or banks. A higher credit score generally translates to more favourable terms which means having lower risk of default. First-timers must not miss any payments so their credit score won’t be affected.

When researching how to choose your first personal loan in Singapore, ensure that the monthly payments fit comfortably within your budget, and leave room for other expenses and unexpected emergencies. Moreover, think about the flexibility of the repayment terms like as the option to make early repayments without any fee.

A reliable lender in Singapore with a track record of excellent customer service can make the loan application process smoother. More importantly, it will provide you with better support throughout the loan tenure. Never deal with ah longs.

Licensed money lenders can often approve and disburse loans within a few hours, sometimes even on the same day. This quick turnaround can be a lifesaver in emergencies, whereas banks typically have a more prolonged approval process that can take several days or even weeks.

Banks usually have stringent requirements, especially for first-timers. If you’re just starting out in learning how to choose your first personal loan in Singapore, you will find out that having no information on your credit history will make getting a loan from a bank challenging. Licensed money lenders are more lenient and willing to work with you.

Licensed money lenders in Singapore operate under strict regulations set by the Ministry of Law. This ensures that their practices are transparent and fair. You won’t have to worry about hidden fees or unexpected charges and everything from the interest rates to the repayment terms is clearly laid out in the loan agreement. This transparency can provide peace of mind. The interest rates, while generally higher than those offered by banks, are fixed and predictable. Therefore, you can plan your finances more effectively.

Licensed money lenders are typically smaller businesses compared to banks, which means they can offer a more tailored approach to meet the needs of first-timers. For example, if you need to discuss your repayment plan or have any concerns, you can easily reach out to them and get a prompt response.

Choosing a personal loan in Singapore doesn’t have to be a stressful experience, even if you’re a beginner. The key is to do your homework on how to choose your first personal loan in Singapore.

If you’re feeling overwhelmed by the options, there are so many resources available to help you. Lender SG is a reputable loan-matching platform that can make your first borrowing experience less intimidating.