When you earn so little and you are left with no other option but to top up your salary with a credit facility to cover the deficit, it’s hard to find a low-income loan in Singapore that will meet your financial needs without making your financial status worse.
And while you may find a lender willing to approve your loan with a low income, this comes with a cost. Therefore, it is important to pay attention to interest rates and payment terms.
What is a Low Income Loan?
Low income does not necessarily mean small pay, it depends on factors beyond your pay such as family size and where you live.
The lending criteria include proof of income and categorize the income from high to low depending on the clientele.
If you fall in the low-income category, then a low-income loan in Singapore is ideal for you.
In a nutshell, the low-income loan is a loan facility advanced to people with low income as categorized by the lending institutions.
Low-income Loan Options
When you have a low income and you are searching for a loan facility, you may think that your options are limited and the ones that are available are very expensive.
This is not the case, there are several low-income loans options that you can explore. Here are some of them:
Secured Personal Loan
As the name suggests, this loan is secured against an asset such as a vehicle or land, or any other property, where you lounge property ownership documents such as the logbook or title with the lender and it is jointly registered.
The security is meant to safeguard the interest of the lender in the event of default. Your property can be repossessed by the lender if you fail to honor the terms of the loan agreement and can be sold to clear your loan balances.
These loans are less risky to the lender and are easier to qualify and have high approval rates.
Unsecured Personal Loan
This type of loan does not require any collateral making it riskier for the lender hence stringent terms.
Due to the risky nature of the loan, it attracts high-interest rates, strict terms, and low approval rates.
Unlike in secured loans, a credit score is necessary here, to prove your creditworthiness. Approval rates depend on your credit rating.
Small Unsecured Personal Loan
This is an unsecured loan with a maximum limit. The limit is usually set by the lending institution, but in most cases, the limit is S$3,000
Payday Alternative Loan
This is a loan that you get to top up to your salary and payable on the next payday. The interest is usually high as it is an unsecured loan and the approval rates are dependent on your salary.
Finding a low-income loan in Singapore isn’t a tall order as there are a thousand lenders looking for that business. However, it may come with a high-interest rate and other costs.