Personal Loan Requirements 101
Ever had that ‘uh-oh’ moment when unexpected expenses pop up? Or maybe you have a goal that just needs a little financial push? You’re not alone.
Whether it’s for emergency situations or planned expenses, sometimes your wallet needs a little extra support, and a personal loan can provide just that. But what do you need to apply for a personal loan in Singapore? After all, before you can even think about submitting a loan application, you need to make sure you have all the necessary documents on hand.
In this guide, we will walk you through the essential documents required to apply for a personal loan in Singapore. This way, you can be fully prepared and increase your chances of getting approved for a personal loan.
Here at OMY Singapore, you will discover the following:
How Does a Personal Loan Work?
Before letting you in on “What do you need to apply for a personal loan in Singapore?”, you first need to have a thorough understanding of what a personal loan is.
Imagine you need funds, but you’re not exactly keen on putting your house or car on the line. That’s where a personal loan steps in. It’s an unsecured loan, which means you don’t have to put up any collateral to secure the loan. Instead, the lender will base their decision on your credit score, income, and other financial factors.
Of course, there are also secured personal loans which means you will need to put up collateral to secure the loan. This could be anything from your car to your house, depending on the amount of the loan.
When you take out a personal loan, you will receive a lump sum of money from the lender. You will then repay the loan in fixed monthly instalments over a set period of time, usually ranging from one to five years. The amount you borrow, the interest rate, and the loan term will determine the total cost of the loan.
What Do You Need to Apply for A Personal Loan In Singapore?
Now that you understand how a personal loan works, let’s get to the important part – the required documents for a personal loan in Singapore.
Proof of income
If you’re eyeing a personal loan or any loan for that matter, banks want to be sure you’ve got the funds to back it up. That means showing them how much you make. This is why you need proof of income.
The documents you need for proof of income may vary depending on whether you’re employed or self-employed, but it may include any of the following:
- CPF Contributions Statement: This document is a record of your savings for the future. It shows you’re putting money aside regularly. Banks usually request 9 months of your CPF history.
- Latest Tax Assessment: This requirement tells the bank how much you earn and how reliable your income is. You must submit a one year income tax notice of assessment.
- Your Latest Payslips: This document provides a fresh look at how much you’re earning right now. Typically, banks need at least 3 months of your latest payslip.
- Bank Statements: Loan providers see this as your history since it shows how regularly you get paid.
- Other income statements: If you earn money in other ways, make sure to mention them too.
Proof of Identity
When it comes to what do you need to apply for a personal loan in Singapore? you also need to present proof of identity.
Your proof of identity can be a photocopy of your identification card, which can be your NRIC. Foreigners can present their employment pass with at least one-year validity.
Proof of address
Another requirement for what do you need to apply for a personal loan in Singapore? is proof of address. This could be a utility bill that shows your name and address, or even your latest bank statements.
Keep in mind that document should be recent, usually within the last three months. The importance of this document is to ensure that the loan provider can reach you in case of any issues with the loan.
You also need to provide details about your current employment status. Loan applicants may present an employment pass, job offer letter, or salary information. For those who are self-employed, business registration details and financial statements are needed.
What Personal Loan Types Can You Apply For?
After you complete what do you need to apply for a personal loan in Singapore? you can finally start exploring the different types of personal loans available in Singapore. Here are some of the most common ones.
Personal Instalment Loan
This option is the most popular type of personal loan in Singapore. With a personal instalment loan, you borrow a lump sum of money from a lender and repay it in equal monthly instalments over a certain period.
Personal instalment loans have a fixed interest rate, which means your monthly payments will remain the same throughout the term of the loan. This type of loan is ideal for those who need a fixed amount of money for a specific purpose, such as home renovations or debt consolidation.
Debt Consolidation Loan
As the name suggests, this loan is designed to help you consolidate your debts into one manageable monthly payment. With a debt consolidation loan, you can combine your credit card debt, personal loans, and other outstanding debts into one loan with a lower interest rate. This can help you save money on interest and simplify your finances.
If you need short-term relief from high-interest credit card debt, a balance transfer might be the way to go.
With a balance transfer, you can transfer your credit card debt to a personal loan with a lower interest rate. This can help you save money on interest and pay off your debt faster.
However, it’s important to note that balance transfer loans usually come with a processing fee and a promotional period, after which the interest rate may increase.
Personal Line of Credit
This unique type of loan is like having a credit card with a high credit limit. With a personal line of credit, you can borrow money up to a pre-approved limit whenever you need it. You only pay interest on the amount you borrow, not the entire credit limit. A personal line of credit is the best option for people who need flexibility with their borrowing and don’t want to commit to a fixed amount.
A Word From OMY
Getting a personal loan in Singapore might seem like a maze of paperwork, especially to first-time loan applicants, but it’s really just about showing how financially fit and reliable you are.
Armed with the answers on what do you need to apply for a personal loan in Singapore?, you are finally one step closer to getting approved for a loan.
When it comes to any loan, comparing the different options available is important to ensure you’re getting the best deal possible. OMY’s loan matching algorithm can help do just that. Get a tailored personal loan here in just a few clicks.