The term Unsecured Loan Singapore refers to a type of financial tool offered by licensed money lenders in the city-state that does not require a collateral security deposit. Rather, it relies on the borrower’s creditworthiness and income to determine their loan approval. This makes unsecured loans an attractive option for many people who do not want to put up their assets as collateral in case they default on the loan.
Nevertheless, not all unsecured loans in Singapore are created equal. It is important to work out a repayment plan to avoid defaulting on your unsecured loan because doing so can negatively impact your credit score, making it harder to qualify for future loans. You may also face hefty administrative charges and hidden fees if you fail to pay off your unsecured loan.
Unsecured Loans in Singapore: Options for Borrowers
Aside from that, it is a good idea to avoid taking out an unsecured loan with a high interest rate. This is because higher interest rates usually indicate that the lender is taking on more risk in lending you funds. It is also advisable to take out the smallest possible loan amount. This is because larger loans can be difficult to manage and will result in a longer loan tenure, which leads to higher overall interest costs.
As a general rule of thumb, borrowers are allowed to borrow up to 12 times their monthly income in Singapore. This limit is designed to prevent excessive debt accumulation and is in line with Singapore’s banking norms. It is therefore crucial to find a reputable licensed money lender who offers reasonable terms and conditions when seeking an unsecured loan. You can do so by researching online reviews and ratings or asking your family and friends for recommendations.