Ever wonder why there are some loan applications which get declined?
Some Singaporeans are so confident that their loan applications will be approved, but they end up getting rejected for some unfathomable reason. Was it just a bad joke? Did the loan manager wake up on the wrong side of the bed?
Moneylenders and their loan officers are not individuals who approve or decline loan applications out of sudden mood swings. After all, lending is still a business and parameters has to be put up to decrease the risk of lending to delinquent clients.
Personal loans are the usual lifelines for most people in the city-state. It is heart-breaking to get rejected when you need it the most. How can you increase your chance of getting approved?
Here are 6 qualifying criteria you must pass
The first thing you will usually see on the list of any eligibility list is the range of age money lenders are willing to lend to. Most moneylenders would give a loan to at least 21 years old up to the age of 65.
Borrowers who are younger than 21 usually do not have enough credit history as they are just starting to earn their first salaries and to charge on their first credit cards.
Furthermore, some lenders admit that clients who are younger than 21 sometimes lack the sense of financial responsibility.
Most banks will only approve a personal loan to a Singapore citizen or a Permanent Resident. Licensed moneylenders offer personal loans to foreigners if they can provide the needed requirements. Personal loans for foreigners in Singapore may have some additional qualifications.
Let’s face the truth that no lender will lend money to someone who has no source of income. How will a person prove that he or she can pay the loan (with the interest) if there is no way to earn enough money to even buy the daily necessities. If you are unemployed, expect that most financial institutions will decline your loan application.
Most banks and moneylenders require a minimum income of around $20,000 to $30,000 annually. Of course, this range may increase for borrowers who are self-employed, earning commission based or foreigners.
- Credit Score
Credit score is something which takes a long time to rebuild. It is the history of handling trust given to you by your previous lenders. Some people may wonder why they got declined despite the high salary and high rank in their company.
Before you go hysterical, you must understand that banks and moneylenders tap the Credit Bureau to peek on your credit score. From there, they can see your previous and current loans, as well as your behavior during the repayment period. Reflect on this question: “How did you handle your past loans and credit card bills?”
Put yourself in the shoes of the moneylenders. A stranger is asking to borrow some money, then you get to see that the previous loan was ended in default. Will you trust that person’s ability to pay?
Aside from the credit score, the moneylenders are also particular with the borrowers’ current financial status. Having a couple of loan at the same time might be hard to track. If you are asked if you have current loans, it is still the best to tell the truth. Why? Because they are most likely to find it out. This is one of the common mistakes some borrowers still do nowadays.
Moneylenders may lend to someone with loans such as a car or home loan, however, you have to prove that you can handle all your repayments.
- Employment duration
For most financial institutions, you must have at least three (3) or four (4) months of employment in your current company. Some financial institutions may not specify the minimum period of employment they require, but it surely can affect your loan approval.
- Co-borrower Details
Usually, a co- borrower must be a Singapore citizen or a Permanent Resident. Most banks require the co-borrower to be a relative of the borrower. What if you do not have anybody who is willing to risk their necks for you?
Fortunately, there are licensed moneylenders who do not require a co-borrower.
Online Personal Loans Requirements
Online personal loans are loans which you can process online though you will usually have to go to the moneylender’s office to sign the loan contract.
This type of loan has a quick turnaround of at least an hour up to 24 hours since the application can be instantly reviewed by the loan managers.
Most licensed moneylenders who offer online personal loans also require minimum qualifications:
- Loan applicant must be aged 21 years and above
- Singapore Citizen or Permanent Resident
- Identification Card (NRIC) and SingPass Login
- Latest proof of billing
- Latest 3-month original payslip or CPF contribution
- Letter of employment
- With this list of qualifications, you can self-assess on which part is your weakness as a loan applicant. Before you apply for a loan, make sure to check the eligibility and requirements of the financial institution to know if you have a chance to get approved.
- If you think you have a bad credit score, either find a moneylender who caters to those with low credit score or nourish it first before applying.
- Provide complete required documents to assure faster process. Make sure that all copies are clear and all details are consistent.
Being a borrower, it is your responsibility to prove that you are creditworthy. The best way to do this is to be diligent in all your loans.
Latest posts by Cash Mart Singapore (see all)
- 5 Questions to Ask Before Buying a Health Insurance - July 25, 2017
- How to Escape the Social Status Trap - July 18, 2017
- 4 Finance Trackers That Can Ease Your Money Problems - July 5, 2017
- 5 New Online Scams You Have to Watch Out For - June 21, 2017
- 7 Affordable Travel Destinations to Tour Your Friends in Singapore - June 14, 2017