A personal loan is a boon when you need cash in times of emergencies. It offers you financial flexibility since you can use the cash according to your needs, at your discretion. You can get personal loans in Singapore from various sources including banks, non-banking financial institutions, moneylenders, employers, and friends and family.
What Is a Personal Loan Agreement (PLA)?
- It is a document that states all the terms and conditions that apply to the loan such as names and addresses of the borrower and lender, the amount borrowed, the rate of interest applicable, repayment method and tenure, monthly instalment amount, other charges if applicable, and other terms and conditions that may apply.
- Both the lender and the borrower sign the agreement.
- It forms a framework within which the parties operate.
- It comes in handy when any of the terms are violated by either of the parties.
- It is wise to make a written agreement even while borrowing from friends or family members. In case disputes arise, this piece of paper can be your saving grace.
- Employers require their employees to sign agreements for any advances or loans given to them.
PLA for Loans Taken From Employer
Employees who take loans from their employers sign personal loan debt agreements signifying their acceptance of the terms & conditions attached to the amount they borrow. Such agreements generally include:
- Securities such as property have complex laws.
- Some may require registration.
- Seek legal guidance before involving security/collateral in a personal loan agreement.
Who Can Get a Personal Loan?
Banks and other lending institutions look at your credit score before they approve your loan application. A good credit rating gives you higher amounts , better interest rates and repayment options. Having a bad credit rating will sometimes make you ineligible for a loan. Fortunately, there are a few solutions that can help you get a personal loan in Singapore even if you don’t have a good score.
You May Like to Know How to Avoid Personal Loan Rejection
Getting a Personal Loan without Good Credit
The first step is to improve your credit score. You can do this by:
- Applying for smaller loans and paying them off on time without any default.
- Consolidating and restructuring your debts by taking a single loan with a lower interest rate.
- Getting help from non-banking financial institutions.
Another way to get a private loan if you have low income or a bad credit score is by getting a guarantor to provide a guarantee on your behalf.
PLA When Guarantee Is Involved
If you are unable to repay the loan, the guarantor bears the liability of repayment based on the guarantee given by him. The personal loan guarantee document usually contains the following information:
- Details of the guarantor, debtor, and lender.
- Amount of money borrowed by the debtor.
- Acknowledgement by the guarantor that he/she is personally responsible for the complete and timely performance of the borrower’s duties in repaying the loan.
- That the guarantor will not mortgage, sell, hypothecate, pledge, or transfer all of his/her assets without getting the prior consent of the lender in writing.
- Other terms and conditions that the lender may impose.
Since a personal loan agreement is a legal document binding the lender, borrower, and any third party involved, to the terms and conditions of the loan, it gives you the legal right to take action against a defaulting party and recover the monies due to you.