Where to get a personal loan with bad credit history

266

In Singapore, bad credit history can be a major barrier to personal and business opportunities. Not only does it greatly reduce the chances of getting a personal loan today, but it can also follow you around for months and even years. However, it is possible to get a personal loan in Singapore with bad credit.

We take a closer look at the cheapest personal loan in Singapore for individuals who do not have a good credit record.

Your Options

When most of us think of a personal loan, we often automatically think ‘bank’. Unfortunately for those with bad credit, bank loans are rarely a viable option.

The chief reason is that banks have very stringent rules about who they will lend to. Of all the tools at their disposal to check eligibility, the credit check is the most common and the first that is used. It comes in the form of a document prepared by the Credit Bureau Singapore.

This report assesses a person’s past loans, repayment history, and associated financial data and then assigns them a credit rating between 1000 and 2000. An individual with a credit score below 1723 is considered a high-risk applicant.

Most Singaporeans with a bad credit history will receive a notice of rejection outright from any bank where they apply for a personal loan.

However, bad financial decisions from your past should not haunt you forever. That is the philosophy that guides Singapore’s licensed money lenders. They are your best option for a personal loan in Singapore if you have bad credit.

Why Choose a Licensed Money Lender?

Licensed money lenders have become an integral part of the financial landscape in Singapore. While they seldom get the good press and publicity enjoyed by financial institutions such as banks and credit unions, they extend their services to a far wider range of clients.

The popularity of licensed money lenders is due to four main factors:

  • Generous eligibility criteria – A bad credit score that would exclude you from receiving a bank loan is often not a deal-breaker with licensed money lenders. Most of them will find a way to give you the personal loan you need through amended terms and repayment options.
  • Accelerated application and approval – The loan application process at a bank is very formal, thorough, and time-consuming. The entire process usually takes days and it can be as long as weeks if you don’t have good credit. At a licensed money lender, applicants can receive a clear answer in just a few short hours. The initial assessment can even be performed online.
  • Reasonable interest rates – The personal loan interest rate in Singapore from licensed money lenders can be negotiated at the time of the application. The rate is determined by the principal sum that is loaned, the period of the loan, and your current financial situation.
  • The personal factor – Asking for assistance is never easy. Many potential borrowers find the entire ordeal of applying for a bank loan extremely uncomfortable, invasive, and even embarrassing. On the other hand, licensed money lenders adopt a far more casual approach. It is more dignified and applicants don’t feel as pressured.

How to apply for a loan at a licensed money lender

The process of obtaining low-interest personal loans in Singapore through a money lender is usually simpler than most people think it is. Still, preparation is always helpful. Before you apply, make sure that you have all the essential documents. This includes your:

  • NRIC
  • SingPass
  • employment details
  • recent payslips

Other similar financial data is also helpful – the more details you provide, the easier and faster your application can be assessed. Foreigners will also need to provide their employment pass details.

It is also helpful to educate yourself on whether you are eligible for a loan and the maximum amount that you can borrow. These are the legal loan limits:

For Singapore Citizens and PRs

  • Up to $3,000 for those earning less than $20,000 annually
  • Six times their monthly income for those earning more than $20,000 annually

For foreigners:

  • Up to $500 for those earning less than $10,000 annually
  • Up to $3,000 for those earning between $10,00 and $20,000 annually
  • Six times their monthly income for those earning more than $20,000 annually

What not to do

One of the most grievous errors you can make as a borrower is to turn to unlicensed money lenders. Remember, they are best known as ‘loan sharks’ for a reason.

Many Singaporeans with bad credit who turn to this unregulated and illegal option find themselves worse off. Not only will you have to pay astronomical interest rates but you also expose yourself and your family to very real threats and acts of violence.

If you need a personal loan in Singapore with bad credit, you owe it to yourself and your family to approach a licensed money lender.