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Learn about Personal Loans in Singapore and how to get a personal loan

Learn Personal Loans & What is a Loan Company in Singapore

More often than not we get asked what is a personal loan and how do we differ from a bank in Singapore. Basically licensed money lenders just work similarly to banks here.

So what is a personal loan company in Singapore really mean and how does the personal loan work out from these money lenders.

Looking for a personal loan company? When exactly?

With the current cost of living rising and jobs being harder to find, more and more people who aren’t so prudent with their finances end up in debts. When one’s financial situation gets out of hand, one turns to friends or families and if that doesn’t work out, you turn to banks.

At times, a person’s credit report or rep sheet is not so great and in turn there’s the licensed moneylender option.

So how does one know that a company operating a licensed money lender is good? Do what a shopper would do. Check out their personal loan rates, ask for their best loan terms & loan period.

Do not forget to ask about the effective interest rate. And just do a simple comparison of what you have.

Lender policies differ between lender to lender, more often than not its the loan terms and interest rates that sets them apart.

Some lenders will be able to offer a flexible personal loan period to suit your needs even. Always shop around and of course customer service plays an important role.

Even us at Empire Global want you to compare. You can easily submit a loan request to us through our online personal loan application. We will get back to you in the quickest time possible on your loan terms.

What determines the personal loan offer you get in Singapore?

Personal loan in Singapore and the how to get a loan

Personal loan in Singapore and the how to get a loan

Although money lender have different personal policies, the main factors remain. Companies like us will look at the type of loan you want, your loan period, your base salary.

Loan specialists will evaluate your financial status and recommend a suitable loan amount, rate and tenor based on your financial needs and ability to repay the loan over time.

Scams from Unlicensed Moneylenders

Believe most of you have read about moneylender scams and loan sharks trying to taunt you to pay up.

These online and offline harassment techniques can certainly be irritating. Some come in the form of SMSes that start out with “OWE $ PAY $”, including a “lovely” expletive and ending with “I SURE COME LOCK AND BURN YOUR HOUSE TONIGHT”. That makes one big bad wolf.

Luckily for us, the Singapore government has been tough on cracking down such cases. Licensed moneylenders found to using such techniques will get their licenses suspended or face a hefty fine.

Licenses of moneylenders have become lesser, as some licensed money lenders end up losing their licenses due to bad practises. Loan sharks and unlicensed moneylenders cases have been facing a lot of heat as the police cracks down on them.

There’s lots of publicity on it and the police has taken an active role in educating the public at large.

Foreigners Seeking Loans: Enter Foreigner Loan

Although there’s banks and financial instituations,  there are a lot more restrictions in place when they provide personal loans.

If you are a Singaporean or a PR that doesn’t earn more than the $20,000 /yr quantum, it can be quite tough to get a loan.

Furthermore if you are a foreigner with less than $45,000 annual income it gets tough to borrow from the banks. So most of the times, foreigners approach licensed money lenders for a take on loans.

How Much Can you Loan?

As mentioned earlier, if your annual income is less than $20,000, it’s tough to find a bank willing to provide an unsecured loan for you at the best possible rates.

However, most licensed money lenders will be able to legally loan you up to $3,000. If you are earning more than $20,000, a licensed money lender can then loan up to 2 to 4 month’s of you salary. Which is why we ask for a proof of salary at times. The loan amount depends on your repayment period too.

Do contact us if you require a personal loan.

Confused By Interest Rates in Personal Loans? Empire Global teaches you

Confused by terms used in Personal Loan? We teach you!

All these financial terms! Frustrated?

Getting a personal loan? Stumbled by the many jargons used by banks and money lenders? Heard of “Effective interest rates (EIR), Annual interest rate (AIR)” Well, let us at Empire Global take you through the many different terms used in personal loan and how you can get the appropriate loan type.

Rule of thumb: BE SMART and careful when you apply for a personal loan, you would not know when the interest rates hits you hard.

As money grows tight in a rapidly growing economy, people starts to take up loans for themselves. Personal loan, payday loans, home loans. However, it is often common that borrowers take up the wrong loan type for themselves or signed off a loan too early which they can’t repay well. Well, today we talk about personal loan and how you should really be careful about the terms spelt out.

What Borrowers Should Learn about Effective Interest Rates (EIR)?

As a borrower, one should be concerned about EIR for your personal loan. When analysing a loan, it can be difficult to get a clear idea of the loan’s true cost based on everything the bank provided.

There are several terms used to describe the interest rate, including effective rate, nominal rate, and more. Amongst all these, the effective interest rate (EIR) is perhaps the most useful, giving a relatively complete picture of the true cost of borrowing (which is why at times its seldom advertised too!)

To calculate the effective interest rate on a loan, you will need to understand the loan’s stated terms and perform a simple calculation. In short, effective interest rate attempts to describe the full cost of borrowing.  It takes into account the effect of compounding interest which is usually left out of the nominal or “stated” interest rate.

For the mathematical inclined!

Effective Interest Rate Formula for the Mathematically Inclined

Effective Interest Rate Formula for the Mathematically Inclined

A typical case scenario is when you have a loan with 10 percent interest compounded monthly. But in face, it carries an interest rate higher than 10 percent, because more interest is accumulated each month.

Interest Rate = 10% monthly
Actual Interest Rate > 10% monthly
 
 

Let’s Break Down Effective Interest Rate Further

1. Determine stated interest rate & number of compounding periods

Firstly, determine the interest rate that is quoted to you and the number of repayment periods. Stated (nominal) interest rate will be expressed as a percentage.

Compounding periods will typically be monthly, quarterly, annually, or continuously.

Stated interest rate = ___%

Compounding periods:

monthly = 12

quartely = 4

annually = 1

2. Making use of the Effective Interest Rate Formula

The effective interest rate is calculated through a simple formula: r = (1 + i/n) ^n -1.

r = effective interest rate

i = stated interest rate

n = number of compounding periods per year

3. Performing calculation of Effective Interest Rate

For example consider a loan with stated interest rate of 5% that is compounded monthly.

Based on the formula yields: r = (1 + 0.5 / 12)^12 – 1, or r = 5.12%

Example of Effective Interest Rate calculation for monthly repayment

Example of Effective Interest Rate calculation for monthly repayment – Credits Wikihow

Another example if it was compounded daily.

Based on the formula yields: r = (1 + 0.5/365)^365 – 1, or r = 5.13%

Note: Effective interest rate will always be greater than the stated rate

Considering home loans? Read more on: http://www.stproperty.sg/articles-property/financial-guide/home-loans-how-to-compute-their-effective-and-nominal-interest-rates/a/119694

2 Main Factors to Check before getting a Personal Loan

1. Compare before you borrow. Be paranoid about it!

Singapore has a huge range of banks and lending companies to choose from. It’s little wonder with the intense competition that personal loan interest rates sway greatly every time. Hence it’s best that you do your research and shop for the best persona loan at the time you need it.

Beware of marketing gimmicks
Free luggages a norm in Bank Marketing Gimmicks

Free luggages a norm in Bank Marketing Gimmicks. Beware of such gimmicks before taking up a personal loan!

One of the basic reason why interest rates fluctuate so much? Banks make money from charging interest rates. Depending on the popularity of personal loan in the market, they can charge lower or higher. You remember those free gifts and luggages when you sign up for a personal loan?

Well, that’s a marketing perk that banks try to get you to signup with their personal loan and take your attention off the high interest rate on offer.and banks can get desperate.

2. Show me the money

As a borrower you would want to pick a loan type to best suit your financials and repayment ability. Some companies will include additional fees such as processing fees, insurance fees which will unknowingly add to your total repayment.

Hence be a smart financial shopper. Be savvy about it. You want to borrow when the the banks are low on clients.

Enough of bank interest rates & terms!

Interest rates. Just show me the money.

Interest rates. Just show me the money.

There are many ways out of financial problems. All that is required is to seek professional advice from the right people. When you are shopping for a loan, be mindful of the different rates that a bank or institution quotes. Always ensure you understand which rates they are quoting and then compare the equivalent rates between alternatives.

These article is just an overview of effective interest rate. Look out for our next article when we go in-dept on personal loan and all the interest rates terms. Leverage on the proper loan by picking the one that suits you best for your situation. In short, do your research well!  

Empire Global is a licensed money lending company in Singapore. We place great emphasis on dishing out proper financial advice to our customers before they sign on the dotted line.