Accessing emergency funds is the easiest way of getting yourself out of a tight financial situation. Most people resort to short-term lending from local moneylenders. Licensed moneylenders lend money to their customers without taking them through lengthy and thorough formalities. Ideally, whenever you seek financial refuge from a moneylender, you must ensure you have the right financial knowledge. Get the correct information about personal loans and emergency funds because some moneylenders are out there to exploit you.
Here’s a quick guide on personal loans in Singapore and how do they work.
Definition of a personal loan
A personal loan is a type of loan that allows consumers to borrow money from a bank or licensed moneylender without some collateral with a promise to pay back on a specified period. The repayment includes the principal and interest due.
A personal loan is a form of unsecured debt given to an individual on a short-term basis. You do not need collateral or any security to get a personal loan from a moneylender or a bank. Since you do not require collateral to access personal loans, they tend to have a higher interest rate. Despite the interest rates, most people still prefer them to other types of loans, such as mortgage and automotive loans.
The interest rate on personal loans attracts most moneylenders to offering their services to customers. For this reason, the financial market is usually flooded with unlicensed moneylenders. It is important to research widely about a moneylender before you can seek for their services. When you opt for personal loans from licensed moneylenders, you should be ready for some simple scrutiny on your financial background. Licensed moneylenders will screen you to find out your chances of defaulting.
Getting a personal loan from a bank may not be such a difficult task. Banks in Singapore are not that strict on permanent residents of the country when issuing personal loans. However, foreigners in the country are required to have some proof of income before they can access personal loans. The restrictions on accessing personal loans from banks make it mandatory for foreigners and other permanent residents to seek solace from licensed moneylenders in the country. Find out more about the uses of personal loans here.