Are you thinking of applying for a personal loan in Singapore? If you are, you’d definitely want to know the various charges that are associated with your loan besides the annual interest you’d be paying towards the borrowed loan amount. Among the different types of fees accompanying your loan, the processing fee is one of them. Banks and financial institutions offering personal loans in Singapore charge a certain amount as processing fees towards the loan. The processing fee is usually about 1%-2% of the loan amount. While most banks charge customers with processing fees, there are a few banks that process your personal loan without charging you a processing fee.
The processing fee is a kind of fee charged by a lender for carrying out the administrative work required to approve your loan. This fee is an upfront charge, which you are supposed to pay for processing and approving your application. This processing fee varies from bank to bank. While most lenders charge this fee, there are some lenders that waive off this fee, based on certain conditions.
Banks charge this fee to cover the costs related to underwriting and labour involved in processing your application. During the course of processing, banks will review your credit score and credit history from CBS, take care of all the paperwork, and verify your legal documents. All this includes service charges payable to different outsourcing agents. Banks consolidate this amount, and at the time of disbursal, collect it from you in the form of processing fees.
In Singapore, the processing fee for personal loans usually ranges from 1% to 3% of the principal amount. For instance, you borrow S$10,000 and processing fee applicable is 3%. In this case, the processing fee you need to pay is S$300 (3% x S$10,000).
Several banks run promotions and waive off the processing fees, provided you fulfil their terms and conditions. For instance, if you apply for an HSBC personal loan by 30 June 2018, the bank will waive the processing fee of S$88. But, the application must be approved by 31 July 2018. Another way you can avoid paying the processing fee is if you have a long-term relationship with the bank and are on good terms, then you can request a waiver. However, this is not a definitive method and the bank may not agree to give you a waiver.
A personal loan can be a saviour when you urgently need that cash. However, it’s best not to have too many personal loans at the same time. Apply for a loan only if you are sure you can pay back the amount on time. This way, you can avoid late payment and penalty charges. Ideally, your monthly instalments should not be over 30% of your salary per month.
The annual interest rates for personal loans in Singapore usually range between 4.5% and 9%. This depends on the bank offering the loan and the type of personal loan product. Different banks offer personal loans at different interest rates – these rates are aligned to meet their in-house requirements and standards. Also, different banks have different eligibility parameters that need to be met in order to get your loan application approved. While there are differences in these aspects, the documents that need to be submitted as well as the steps involved in applying for the loan remain more or less the same.
You can either take the online or the offline route to apply for your loan. If you wish to take the offline route, you can visit any branch of the bank you wish to apply your loan from and physically fill out the loan application form. The documents that need to be submitted along with your loan application can also be submitted at the bank’s local branch.
You can also take the online route by visiting the bank’s official website (the bank you wish to apply for your personal loan from), fill out the online loan application form, and upload the necessary documents. A representative from the bank will subsequently contact you and obtain further details if necessary. Your application will then be processed by the bank and reviewed by the bank. If all necessary eligibility conditions are met, you can expect to receive the funds in 3-4 working days.
Here are a few banks in Singapore that don’t charge you a processing fee for your personal loan Singapore:
Many a time, whether or not the bank will charge you a processing fee will depend on your requested loan amount and the loan tenure.
Banks take certain aspects into consideration before approving/rejecting your loan application.
Your employment stability is an important parameter that banks take into consideration while reviewing your personal loan application. Stable employment will give banks or financial institutions the understanding that you can make repayments consistently through the period of your loan tenure and avoid defaulting on monthly payments because of an uninvited job situation. If you’ve been working in the same organisation for, say 2 years, this will work well for you. Sometimes, even if you’ve just joined a new organisation but hold years of prior experience, that is undoubtedly a positive sign that will work in your favour.
The basic idea when it comes to your income is that it should be in line with your requested loan amount. Banks in Singapore (most top banks) have their own income eligibility conditions for personal loans. While the income eligibility parameter is a basic requirement, your requested loan amount should match your income. If you’ve only met the minimum eligibility parameter as far as your income is concerned but requested for a large loan amount with a large tenure, the bank will most likely not sanction your requested amount.
A good credit score is always important if you wish to apply for a personal loan. In fact, your credit score forms the basis of your bank’s decision to approve/reject your loan application. Your credit score is obtained from your credit report and records all types of credit you’ve borrowed - ranging from payday loans to credit cards, personal loans and other types of loans. Besides, your payment history - the manner in which you’ve made payments - are also recorded, giving banks a comprehensive understanding of how good a manager you’ve been of your own credit.
If you already have a bank account with the bank you wish to apply your personal loan from, it can work in your favour. Also, if you hold a credit card from the same bank, even better for your cause. This is because the bank will consider your loan application, owing to the fact that you’ve maintained a bank account for a good period of time and you already have a credit card from the same bank (which of course is beneficial to the bank). A good credit score coupled with this aspect will undoubtedly see your loan application getting approved.
These above mentioned parameters influence your personal loan application. A decent outlook on all these above mentioned parameters will definitely translate into the approval of your loan application.