Have you heard about monthly instalment loans in Singapore? These are personal instalment loans where a borrower repays the total loan amount in fixed monthly instalments.
It’s an efficient loan choice for a borrower who wishes to resolve unexpected financial expenses or consolidate existing debts. The design of the repayment terms for the instalment loan focuses on fixed periods, usually through regular monthly cycles.
In Singapore, various authorised lenders offer this, particularly local banks, financial businesses, and licensed moneylenders. The everyday use of the loan also depends on the borrower’s needs. But it’s the ideal choice for someone who must acquire fast funding due to home or vehicle repairs, support for medical bills or medications, and consumer needs.
Overall, it’s an excellent and efficient option for genuine financial requirements. But, people must understand this personal loan’s risks, requirements, and advantages. In this article, you’ll obtain an accessible yet thorough explanation of instalment loans in Singapore.
How Do Monthly Instalment Loans Work?
A monthly instalment loan in Singapore works in a specific method. It provides borrowers with a substantial sum of money to repay every month.
Is this a secured or unsecured loan? It’s an unsecured loan; a perfect example is a personal loan. It means a legal lender doesn’t impose demands on the borrower to produce collateral for the loan.
What’s a Personal Loan?
In Singapore, financing and moneylending businesses offer different loan products. Yet the most popular one is the personal loan primarily because it’s fairly easy to access and obtain funds, as it’s an unsecured type of loan.
It’s also flexible to use, unlike other loans. You may apply for personal loans depending on your financial needs. So, it’s the most helpful tool whether you’re in a tight urgent monetary situation, covering medical bills, wedding requirements, or debt consolidation.
A personal loan is the same as a monthly instalment loan. Thus, these two are considerably prime choices for obtaining funds and paying them on a regular monthly schedule.
Here are essential details a borrower needs to know regarding monthly instalment loans:
1. Monthly Instalment Loans Amount and Process:
When applying for an instalment loan, borrowers must disclose the amount they wish to take out. It can range from S$500 to S$100,000. It’ll mostly depend on their financial needs and situation.
The loan application for personal instalment loans will motivate borrowers to research before finalising and completing the process.
Remember that the monthly instalment loan’s approval varies specifically on factors like credit score and history, income and existing debts.
Here are the steps a borrower must first do when pursuing the monthly instalment loan application procedure:
Research Authorised Monthly Instalment Loans Lenders
These days, before anyone purchases an item or orders some service, they’d usually research before finally selecting the product or service that fits them best. It’s also the same case with loan applications. Borrowers can’t impulsively pick a lender without proper awareness if the lender’s certified, capable, proffers good customer service or imposes high or low-interest rates.
You may search for legally authorised moneylenders in Singapore from the websites of the Ministry of Law’s Singapore Police Force, the Association of Banks in Singapore, and the Credit Bureau Singapore.
Review reviews and get information on interest rates, repayment terms, and fees from previous or recent customers from unbiased websites like Moneylender Review, Singapore Legal Advice, Loan Advisor, Yelp Singapore, or Seedly.
Other sources that can offer a more personal touch are recommendations from friends, colleagues, and family members. Their first-hand experiences may be the best accessible and truthful review to help you research and choose an authorised lender for the instalment.
Monthly Instalment Loans Eligibility
When you already have your potential and most promising lenders, review and check if you’re eligible for the loan, particularly:
- Age eligibility starts at 21 years old to 65 years old
- Nationality being either Singapore Citizen, Permanent Resident, and Foreigners with validated passes
- Credit score
- Monthly or annual income
- Employment proof
Monthly Instalment Loans Eligibility
Some lenders could demand different types of documents from their loan applicants. Nonetheless, the general paper works mostly asked by certified lenders in the country are:
- Proof of identification via passport or NRIC.
- Income verification should be the latest payslip or income tax statement as proof of income alternative.
- Certification of employment or employment letter prepared by the salaried employee’s employer.
- Proof of residency, like a bank statement which shows the current address or utility bill.
- Bank statements with the latest update showing the borrower’s financial status.
- The loan application form should be filled out as accurately as possible with relevant information needed.
- Supplementary documents such as tenancy agreements, CPF statements, or business registration certificates that lenders may also require.
Monthly Instalment Loans’ Approval and Agreement
As soon as the borrower has successfully qualified for both eligibility and documents, they may wait for the loan approval.
The period waiting for the approval could take a few days to weeks, primarily if the borrower worked with a traditional bank or financial institution. But if the borrower sought a licensed moneylender, the period may only take a few days or hours.
Upon receiving notification of the loan’s approval, the lender will provide the agreement specifying the terms and conditions associated with the loan. Borrowers must read every detail carefully and ask for clarifications about confusing matters. It’s better to assess the agreement while in the lender’s office so resolving issues is easier to handle if issues arise.
When the lender and borrowers have discussed and reached an agreement, the latter will sign the document. The certified lender must provide a copy of the loan agreement and other documents for additional validation and proffering borrowers additional assistance.
Receive Cash and Repay the Loan
After the borrower signs the loan agreements, fund disbursement follows. The borrowed money is wired directly to the bank account provided in the application form. The disbursement could be on the same day or a few days.
Upon receiving the funds, the countdown begins for monthly payments for the instalment loan. It’ll be by the repayment term and schedule outlined within the agreement.
2. Monthly Instalment Loans’ Interest Rates and Credit Scores:
The interest rate may depend on the borrower’s credit rating, monthly or annual income, and the amount they’d want to loan.
Any individual’s credit score in Singapore is based on the system created by the Credit Bureau Singapore. Below is the table illustrating CBS’ credit score system:
| Credit Score Range | Risk Grade | Credit Description |
| 1911-2000 | “AA” | Excellent |
| 1844-1910 | “BB” | Good |
| 1821-1843 | “CC” | Fair |
| 1000-1820 | “DD” | Poor |
| Below 1000 | “EE” | Very Poor |
The CBS created this specific credit score system to assist the county’s banks, financial institutions, and licensed moneylenders in assessing the borrower’s creditworthiness.
The higher the score and risk grade are, the more individuals are considered low-risk borrowers and likely to get immediate loan approval. On the other hand, people who’ve earned fair to very poor credit scores may face difficulties in gaining access to loans or endure higher interest rates.
Yet, it’s a challenging pursuit for individuals who’ve earned below 1000 credit scores. They may not be rejected to obtain loans, mainly from traditional lenders.
3. Monthly Instalment Loans Repayment Period:
It’s the amount of time a borrower needs to fulfil repayment terms. The lender will discuss this and assist the borrower in starting the loan application and fixing the duration, specifically the:
- Length of Repayment Terms:
The length of reimbursement terms for personal instalment loans is divided into three specific categories:
- Short repayment terms
It’s usually applied to smaller amounts, with the design encouraging the borrower to pay it back quickly. This’ll be an ideal option for borrowers who genuinely need a quick cash infusion but prefer not to repay the loan for extended periods.
The length ranges from a few months up to a year.
- Medium repayment terms
The repayment term mostly ranges from two to five years.
- Longer repayment terms
It’s the lengthier option than the monthly instalment loan and can last up to ten years. It could also last longer. Due to the lengthier repayment time frame, lenders may demand their borrowers provide collateral.
- Impact of interest rates and monthly payment amounts
The reimbursement terms can be affected by interest rates and monthly payment amounts.
For one, loans with longer repayment terms usually get higher interest rates. Since the lender takes on a higher risk of lending money for much longer, another factor which affects repayment periods is the monthly payment amounts.
Shorter and medium-length reimbursement terms require the borrower to pay a much higher monthly subsidy to complete the loan cycle. However, longer repayment terms may have smaller payments.
Here’s an example you may consider before pursuing a personal instalment loan in Singapore. You’ll take out a S$5,000 loan with a 6% interest rate and a 12-month repayment term. The borrower needs to pay around S$460 payments per month.
Possible Risks With Monthly Instalment Loans
It’s a given that risks do happen within financial transactions. It’s the same case with a personal instalment loan. Understanding the risks involved will also help you learn to prevent these from occurring to you.
Here are some of the possible risks, including:
Loan default:
It happens if you miss out or fail to repay on time. Situations like these may lead to penalty charges and additional fees and affect the credit score negatively.
High-interest rates:
A monthly instalment loan come with high-interest rates. Thus, before signing the loan agreement, assess the interest rate first and calculate if it’s within your means to avoid long-term debts.
Fraudulent and scammer lenders:
Not all lenders in Singapore are legally licensed to operate moneylending activities. These individuals or entities are usually called unlicensed moneylenders or ah longs. Prevent the possibility of becoming their victims by checking customer reviews on moneylenders.
Unnecessary debt:
Monthly instalment loans are pretty accessible to most people in Singapore. Thus, the temptation to get extra funds might be tough to overcome. This’ll lead to unnecessary debt.
It’s perfectly fine to apply for loans, only in moments of a genuine need for financial assistance and not for unnecessary reasons.
Benefits of a Monthly Instalment Loan
A borrower who needs extra money doesn’t only focus on the cash they’re about to get from the loan. In truth, they prefer to choose a loan that offers funding and additional benefits.
Some benefits borrowers could get from a personal instalment loan are:
- Financial assistance for covering unexpected expenses.
- Efficient for consolidating existing debts like credit card debts into a single loan with an accessible and more affordable fixed monthly payment plan.
- Fixed repayment schedules make budgeting finances and paying the loan much more accessible. The borrower can have peace of mind knowing there won’t be unexpected or hidden charges to the monthly amount they’d pay.
- Competitive interest rates, especially when a borrower has good to excellent credit scores. Thus, the personal instalment loan is among the most cost-efficient solutions for resolving financial problems.
- The fast and convenient application process is a primary benefit. People take out a loan due to dire financial need, and a personal instalment loan process is easy and hassle-free. So, a borrower will no longer be plagued by unexpected expenses and will gain peace of mind.
Taking out Monthly Instalment Loans is Worth It
The high inflation rate and taxes have made it a little more difficult for many people in Singapore to live peacefully. The days are mostly filled with worries about making ends meet or paying unexpected expenses.
The only way to resolve the problem is to take out monthly instalment loans in Singapore. You must review and gather the necessary documents and fulfil the criteria to become a viable loan applicant.
Regardless of the reason behind the loan, know that getting one to solve financial problems is always worth the effort.
Are you ready to take a loan for your financial needs with a regular monthly instalment? Let us take care of you! Click here and apply for a loan now!
