In the modern era, loans often play a regular and highly impactful part in personal and business growth for most of us. There are personal loans that people take to meet their needs related to personal expenses, purchases, emergencies, studies, business and so on. There are several financial service providers with a money lending license in Singapore. However, before you take a loan, it is extremely important to know the amount you need to repay as per the cost of the loan you take from a moneylender in Singapore.
It can often be that one might think “it is better to borrow from a moneylender near me”, but, the right criteria is to find out how much interest your neighbourhood moneylender charges. The ideal practice would be to take loans from a moneylender who has a valid money lending license in Singapore and one who offers lowest rates of interest on the loan. Let’s go ahead and unravel the mystery of loans and interests through this borrowing guide on finding a good moneylender in Singapore.
Different types of loans
To begin with, you are likely to find a licensed moneylender in every part of Singapore by a simple online search by typing ‘find a good moneylender near me’. All of them offer different types of loans, and usually at different rates of interest. Therefore, you need to figure out what kind of loan you are looking for.
Here are some of the most popular loan types and the typical rates of interest that different money lenders with a valid money lending license in Singapore charge for such loans.
Personal Loan – A personal loan is the type of loan that you borrow to use for your own purposes. It could be spent on purchasing gadgets, a wedding, a vacation, paying off old debts, or for any other unspecified reason. Moneylenders in Singapore charge anywhere between 12 to 25% per annum on personal loans.
Student Loan – As the name indicates, student loans are to pay for education fees and living expenses. These are common among people studying in Singapore, and this type of loan has interest range of 10 to 15% per annum.
Business Loan – At times you may need to borrow money to invest in your business. It could be for the purchasing of new equipment or raw materials or other business needs. This type of loan is available at an interest ranging from 10 to 20% per annum.
Payday Loan – Sometimes, a payday loan is also called an instant loan or cash loan. It is a short-term loan borrowed to pay for an emergency, bill or urgent need. Such loans are usually the most expensive when it comes to the interest, and money lenders charge from 24 to 48% per annum on these loans.
Factors that define the cost of loan
The cost of loan depends on the type of loan borrowed. As explained above, a moneylender in Singapore is likely to charge different rates of interest for different loans. Therefore, the more expensive an item is, the more interest you are going to pay for it. In case you are going to take a loan to buy a car, the interest rate payable would be 12-24%.
However, the rate of interest for a house is going to be 10-20%. Similarly, if you need to take a loan for some short-term and urgent need such as paying an urgent electricity bill, the interest rate to pay would range between 24 to 48%. There are typically three major factors that determine the cost of loan from a moneylender in Singapore. These are:
Loan term – The longer a loan’s term, the interest rate is likely to be lower. For instance, if you take a loan which has a six month long term then the interest rate could be between 10 to 30% per annum. However, for a short-term loan of one month duration, the interest rate would be between 24 to 48% per annum.
Amount borrowed – The larger the loan amount, the higher the rate of interest will be. For a loan of $10,000 from a moneylender in Singapore, the rate of interest would range from 12 to 25% per annum. However, for a loan of $5,000, the interest rate is likely to be between 10 to 15% per annum.
Duration of time before repayment: The longer the duration before the repayment of the debt, the greater the rate of interest to be charged on top of it. For instance, the duration of six months before repayment is likely to make them pay 10-30% in additional charges.
However, if the repayment is only one month before the repayment, the extra charges could range from 24 to 48%.
We hope that this loan guide will help you manage your loan process better. All the best