Personal loans are nothing less than a boon for people who have to manage a significant expense and don’t have enough funds at hand. A personal loan helps in paying off major expenses like a wedding, home improvements, repaying a major debt, or for buying something significant.
Knowing the entire process of applying for a personal loan will ensure that you don’t miss out on any crucial formality. Here is what the step-by-step process of applying for a personal loan looks like.
STEP 1: Decide what you need
First things first, do a self-introspection and evaluate your financial condition. Figure out how much you have and how much more you need. In case, you are planning on buying something big, you will be able to decide how much capital you precisely need. Based on your current financial circumstances, you can apply for the remaining amount. It’s better to determine how much you can spend each month and borrow lesser than your maximum limit so you can avoid stretching yourself.
STEP 2: Look at your credit score
We all know that a credit score is a vital deciding factor when you want to apply for a personal loan. Check your credit score and find out where you stand. In case, you have an excellent credit rating, there are higher chances of getting a personal loan on a lower effective interest rate (EIR). But if you have a poor credit score, you will either have to wait until it becomes better or find a cosigner to help you get a loan.
STEP 3: Compare your options
After deciding the amount you need and working on your credit score, it’s now time to compare all the available options. Singapore offers an array of loan types available – secured loans, unsecured personal loans, fixed rate, variable rate. There are various loans for bad credit, such as payday loans. Several professional lenders also provide different types of loans. Based on the amount you want and the duration or repayment, you can take a look at the different loan types, compare the options, and decide which one best suits your needs.
STEP 4: Check your eligibility
Irrespective of the option you choose – lenders, banks, or loan providers – all of them will have a list of requirements that you will have to meet to be eligible for a loan. See what your loan provider requires, and make sure you meet those terms before you apply. You may need to make an appointment in person with the loan provider to discuss the necessary materials, documents, and timelines. Make sure you ask all the questions you have so that you can proceed with clarity. In case, you proceed without checking your eligibility, there are chances that you may fail during the next steps. It will waste your time and efforts. Thus, ensure that you meet the requirements or look for an alternative.
STEP 5: Make a checklist and gather everything
Once you know what all is required for getting a personal loan, you must create a checklist. This checklist should include all the documents that you’ll need for the loan application. You can also create a checklist of smaller tasks that you may otherwise forget. Creating checklists is wise, and it ensures that you won’t miss out on any crucial document or step before the loan application. Once you have your checklist, you can start gathering the documents. For most loans, you will need documents to confirm your identity and address, and verify your income, other financials, employment and much more. It can take some time for you to gather them, but at least you won’t miss out on anything, thanks to the checklist.
STEP 6: Submit your application
When everything is in place, it’s time for the most important step – applying for the loan. Based on which option you choose, you can apply online or visit the bank or lender in person and apply physically. In case,
During this step, be careful and alert. Fill in your personal, financial, and employment details, and all the other information required. Select the loan amount and tenure that you require and submit all your documents appropriately.
STEP 7: Get the money
After applying for the personal loan, it’s time to wait for funds. Keep checking your bank account for the funds. Most reputed loan providers in Singapore generate money within a day or two after your application is accepted. Be in touch with your lender or bank so that you know the update of loan processing. In case, your lender or bank is going to hand over a check to you instead of cash in your account, make sure to be in touch with the lender and get the check at the earliest. Once you receive the funds in your account, notify your lender or bank as well to keep them informed.
STEP 8: Spend the money
In case, you applied for this personal loan to pay for something, it’s time to do it. But if there wasn’t a solid reason for the loan, you are free to spend it as you like. Congratulations!
STEP 9: Repay the money on time
You surely know this, but we would like to remind that you must repay the amount in time to avoid paying extra. You will be liable to pay the penalties if you cross the deadline.
We would suggest that you keep this guide handy so that you can view and refer to it the next time you wish to apply for a personal loan in Singapore.
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