Personal loans are the most common loans in Singapore, with not just banks but other regulated financial institutions also offering them to Singaporean citizens. Personal loans attract a higher rate of interest in comparison to car loans and home loans, mostly because these loans are unsecured loans – loans that do not require any form of collateral or security as an asset guarantee against the loan amount. Personal loans are unsecured mostly because the amount isn’t usually as huge as a car loan or a home loan. Several top banks in Singapore offer home loans at varied interest rates. If you wish to apply for a personal loan, it is important to examine various personal loan products of different banks and choose the one that has the most accommodating interest rate.
Most top banks in Singapore offering personal loans have an instant approval mechanism wherein your loan will almost instantly be approved depending on parameters including your income and whether or not your company is registered with the bank in question. The approval, however, is only temporary – your loan will be sanctioned and disbursed only if various other parameters such as the validity of your documents and your credit score obtained from the credit report meets the bank’s requirement.
Anybody applying for personal loan would want their loan to be approved and sanctioned swiftly, right? Well, here are some top banks that offer fastest personal loan approvals:
While the approval in the case of these banks is almost instant, processing of your loan application will take about 2 working days. You can expect to receive the money in your bank account in 3-4 working days after applying for your loan.
Personal loans offered by most banks in Singapore carry an Effective Interest Rate of anywhere between 4% and 10% p.a. The Effective Interest Rate is fundamentally dependent on the tenure period of your loan. Depending on the amount, the tenure can stretch up to 5 years – the longer the tenure, lower the interest rate. Different banks have different EIRs on their personal loan offerings, again, depending on the tenor.
When you apply for a personal loan, although you may receive instant approval (which of course is temporary), there are other factors that influence your loan application. Remember, the instant approval is only a temporary mechanism in place and is mostly dependent on your income. If your requested loan amount matches your income slab, you’ll receive an instant approval by the bank.
Your credit score is the most important parameter that banks will assess while reviewing your loan application. Your credit score is obtained from your credit report and gives banks/financial institutions a concrete idea of how good a manager of credit you are. Your credit score includes many aspects such as your credit history, total debt, type of debt and percentage of credit utilised against your total available credit limit.
Your credit score will include all your past loan/credit card applications and make a record of your payments. A good credit score would mean that you’ve managed your credit effectively in the past, giving banks an idea that a default isn’t a probable scenario. A bad credit score, on the other hand, would work against you, causing your application to be rejected.
Your credit history is the most crucial parameter as it gives banks information about your payments – instances of late payments and defaults will be recorded promptly in your credit report. So if your credit score isn’t good because of bad management of your credit card debt, you might want to drink the good luck potion Felix Felicis like Harry Potter in order for your personal loan application to be approved.
After applying for your loan, you are required to submit all the necessary documents as requested by the bank. Your bank will reject your loan application if you haven’t submitted all necessary documents required to process your loan application. Here is a tentative list of documents that banks require you to submit:
You can apply for a personal loan by visiting the official website of the bank you wish to apply your loan from and placing a request for a personal loan. The bank will require you to fill out the online loan application form and upload your relevant documents. Once this is done, an executive from the bank will get in touch with you and request you to confirm your application details, following which the bank will process and review your loan application.
Well, different banks have different timelines for processing and reviewing personal loan applications. Ideally, even in the case of the fastest loan sanctions, banks take a minimum of two or three working days (or maybe even more) to process, review, approve and sanction your loan application. So ideally, if you’ve applied for your loan from one of Singapore’s top banks, you can expect to receive the money in your account in about 3-4 working days from the date of applying.
While a bad credit score will most likely result in the rejection of your loan application, there are some parameters that banks consider and can work in your favour.
If you have an existing relationship with the bank you’ve applied for your loan from, your case might come through. Sometimes, you can apply for a debt consolidation loan from the bank you have an existing relationship with and direct all your debt into one single instrument, making repayments and debt management much easier.
If your income level is way higher than the corresponding amount you’ve requested for, your loan application might be approved even if your credit score is bad. Having an existing relationship with the bank as well as a good annual income might work well for you in light of a bad credit score.
So, if you wish to take a personal loan in Singapore, keeping these points in mind will help you get the right idea about how personal loans work, how banks approve your loan and how long it’ll take the bank to sanction and disburse your loan.