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Getting a Loan in Singapore

We are in an era where competition in a society like ours is heated, tough, and merciless. Living standards are higher, and the influx of foreigners, albeit for the betterment of our entire workforce, also means competitive salaries. Yet the reality of life has suggested that we have both material and essential needs that are beyond our financial ability. I for one have no clue on how to attain these needs, and the word “loan” serves as a direct relation to the word “debt”. I seek to correct this stigma in this article and guide you lot to a sneak preview of understanding how to get a loan in Singapore, and the different types available.

The “I need to go to school” loan

Yes, this is the student loan that some of us may be familiar with. It is the quintessential loan because we all know that education or pursuing further education has a direct effect on financial success and how appealing you are as an employee. It is because of this, that the upside of this loan is that several banks and government bodies provide financial aids, to cater opportunities for you to seek educational assistance in terms of the moolah.

The “I just need to pay this bill” loan

I think the one we’re mostly familiar with at the start is the personal loan. This is the kind of loan that you get to perhaps fund a small business, to pay the bills or reparations for that “ I really can’t believe this happened to me” kind of days. You get these loans from a bank, credit union or an individual.

The “I’m getting married, so…” loan

This we definitely know. It’s so routine that even if you didn’t want to learn how, you’d have to. Unless, staying with your parents is something you could do for the rest of your life, while appeasing your partner that it’s an act of filial piety (it might be don’t get me wrong). The second type of loan is the home loan. This is the biggest financial commitment for most of us, and the defining moment between you and your partner; it’s not so much “we got engaged”, and more so, “we’ve applied for a BTO”. The properties that are eligible for home loans are your HDB flats and private properties that are already completed or under construction. The two types of home loans one can get are your fixed rate loans and floating loans and as far as eligibility goes, banks typically will base the loan approval on criteria such as your minimum income, age and residence status. So the general rule is that your monthly home loan instalments and other loans you’ve made cannot be more than 35% of your gross income. That, and the fact that if you fail to pay these instalments, the bank will rescind your loan, and take your home. For more information, you can proceed to http://www.moneysense.gov.sg/~/media/Moneysense/Guides%20and%20Articles/Guides/Home%20Loans_English.pdf

“For everything else, there’s Mastercard.”

Your credit cards are your best friend, just as they are your worst enemy. Think of it as borrowing on credit and then being offered the most convenient way to pay for things, without actually using cash. Swipe and sign at your normal stores, and key in your details at your online stores. The amount is billed to your monthly statement, and you then pay for it like a normal bill. Here’s the catch; should you decide( or not have a choice in the matter) to pay only a minimum sum or a partial amount of the sum owed, interest will be charged along with any new item you purchase consequentially. The perks? Cash advance facilities, getting that 0% instalment plan when you buy your TV, Macbook or furniture, and of course, the freebies. You may apply for a credit card from your usual card issuers and upon approval, you will be issued your credit card with a limit set of your choice (peril). The minimum annual income requirement for credit cards is 30,000SGD.

Because let’s face it, we’re all going to need this. Yes, all of us.