Archives

People take loans for several reasons — from financial emergencies to medical expenses to home renovations to honeymoon budgets. If you’re taking a loan, it’s probably because you’re low on your savings. However, it should always be a kind of loan you are in a position to repay. When you take a loan, repaying it is usually the last thing on your mind. Even moneylenders in Singapore make your loan approval process quick and convenient these days. However, just because you get loans in Singapore easily doesn’t mean you can afford to be careless with them. While defaulting on your loan may look like an easy way out (thanks to the wrong portrayal in movies and shows), it is a major financial headache in real life. In all seriousness, not repaying your loan can affect your life goals. In this blog, let’s go over what happens if you don’t repay your loan in detail. 5 Serious Consequences of Not Repaying Your Loan 1.    Legal Proceedings You sign a contract when you get a loan, and that is a legally binding contract that holds you obliged to repay the loan. So if you fail to repay your loan, your licensed moneylender can take legal action against you. They can issue letters of demand from a lawyer or file a lawsuit suing you for the outstanding debt. Financial institutions usually initiate legal proceedings if they suspect you have the money to repay but are willingly becoming a defaulter. If your loan payment instalment is due for more than 30 days, you will first receive a legal warning. Institutions can take action against you sooner if they think you’re up to something fishy. 2.  Collateral Loss If you took a secured loan, such as home mortgages, car loans, or business loans, you pledged your valuable assets as collateral to the financial institutions. If you fail to repay your secured loan, moneylenders may seize your collateral to recoup their losses. 3.  Money Seized from Account If you take an unsecured loan, you don’t have to pledge collateral. Thus financial institutions can’t seize your assets. However, if you have money in your bank account, the institution can seize that and use it to repay your loan. However, it largely depends on the financial institution in question and the terms and conditions involved. Therefore, before you sign off on your loan documents, check the details and read everything. 4.  Employment Issues Your credit reports show everything about your loan history. If you didn’trepay your loans, it will show that. If your debt was written off and you didn’t settle it, the default will be on your credit report forever. Generally, potential employers cannot check your credit report. However, they can request to see it. Lately, finance companies have been doing so to ensure they do not hire people who are in debt or didn’t repay loans. It is either seen as a sign of irresponsibility or suggests your finances will affect your work efficiency. 5.  No Future Loans Banks go through your entire credit report before providing you with a loan. Unlike banks, moneylenders do not base your loan approval solely on your credit score. Still, failing to repay your loan can affect your probability of getting a future loan. Every loan application has to go through the Moneylender Credit Bureau (MLCB). It stores information, such as your borrowing limit, unpaid loans, and repayment history. The database will show your missed loan payments. If your data shows a long history of failing to repay your loan on time or still having outstanding debt, the moneylender is likely to reject your application. What Can Moneylenders Do? Loan sharks are quite prevalent in Singapore. Several times, people take loans from unlicensed and illegal moneylenders in emergencies. Since they have unusually high-interest rates, borrowers often fail to repay their loans. As a result, loan sharks take to illegal ways to get their money back. Therefore, it is vital to know what licensed moneylenders can do in case you fail to repay your loan. Have a look – Moneylenders can mail you a letter of demand for the missed instalments. They can visit your home (and as a last resort, your office) to deliver a letter of demand. During reasonable hours, they can try to contact you by phone or text message. They can take legal action against you. What Can Moneylenders Not Do? When you research the best moneylenders in Singapore, ensure you shortlist the licensed ones. Licensed moneylenders are governed under the Moneylenders Act. Thus they need to abide by certain regulations and laws. They cannot resort to illegal activities, unlike unlicensed moneylenders. Oftentimes, moneylenders hire debt collection agencies to collect money owed to them by the borrowers. However, even agencies have to comply with the regulations. Here is a glimpse of the code of conduct and good practices that licensed moneylenders and debt collectors have to comply with. They cannot – Try to injure you Intimidate, threaten, or harass you, and/or your family members Stalk you or your family members Assemble you unlawfully Damage or vandalize your personal property If you face any kind of harassment, you are within your rights to take action against the moneylender. You can – Report the moneylender to the police Complain against the moneylender to the Credit Association of Singapore Make a complaint to the Ministry of Law’s Registry of Moneylenders. We agree that all the consequences above make it look like everyone should stay away from loans. It’s true to a certain extent — loan repayment is not as easy as it looks. If you don’t have the money now, you need to map out how you will repay the loan. Therefore, before you commit to a loan, understand the basics of budgeting your expenses. Otherwise, you would land yourself in debt and possibly bankruptcy. Also, it’s vital to understand the difference between good debt and bad debt. Strategic use and proactive planning will help you sail through the

If you are here, you probably have two or more debts pending repayments. The debts may be from your personal loans, credit card loans, and more from several creditors. Let’s be frank, debt can stress you. So, what about having different obligations? You’ll have to bow to the high-interest demand while trying to beat the due dates for clearing. The good thing is a debt consolidation loan is available, and Singaporeans swimming in multiple debts should utilize it! Without further ado, let’s dive into this article to learn more details about debt consolidation, its benefits, types, and who should use it! Debt Consolidation Loan – What Does it Entail? In simplest terms, debt consolidation is merging loans from multiple creditors into one loan under one bank. Once you consolidate these loans, you enjoy a lower interest rate and a well-defined payment plan. A debt consolidation loan seeks to cover all your high-interest loans to a low-interest one. So, if you have debts on your car, credit card, or student loan, you might want to combine them. You open a single account for these three loans and pay one sole amount monthly instead of making multiple payments geared to clear each of the loans. If you have many debts, combining them will ensure you stay at the top of your finances. Furthermore, you will likely not miss out on loan repayment, which helps in having a good credit history. However, remember that debt consolidation does not wipe out your loan balance. Your debt amount remains the same, but at least the interest lowers, so you save a lot on this. How Does Debt Consolidation Loan Work? Debt consolidation makes your debt repayment easy. If you owe different lenders money, keeping track of what you’ve already paid and the remaining debts is challenging. You’ll even forget the minimum amount you should pay, which can affect your credit score. It is a process you can efficiently complete as long as you have all the relevant documents and paperwork to put together the different debts. Then, you need to apply for a debt consolidation loan from a licensed lender. By doing this, the lender or bank typically purchases your pending balances from different creditors. You, therefore, get a new loan, but this time at a lower interest rate. Now that you have one loan, you enjoy a single due date, too, that’s easy to keep track of. Typically, you need to make fixed monthly repayments with a debt consolidation loan over the loan tenure period. Who Can Use Debt Consolidation Loan? For one to be eligible for the debt consolidation loan, they must fulfil the following requirements: Be a Singapore citizen If you are a foreigner, you must be a permanent resident of Singapore with a valid work permit. You must be employed and earning a monthly salary – Now, your lender should stipulate the minimum amount you should be making. You are only eligible for the debt consolidation loan if you have no other plan. You can only have one debt consolidation plan at a time. To get the debt consolidation loan, you must present certain documents that your lender deems fit. Such may include: Proof of identity Proof of income Proof of residence – foreigners Work permit – Foreigners Payslips Why Should You Apply for the Debt Consolidation Loan? 1.    To Save on Interest One significant benefit of a debt consolidation loan is that it allows you to save so much on interest. Interest on credit cards is generally high in Singapore. Therefore, if you can consolidate this loan with others like car loans, you will most likely spend significantly lower interest rates. 2.   You Quickly Repay Outstanding Debt The goal is to wake up one and realize that you are debt free! However, this is not readily achievable, especially when you have several loans pending. With the right strategy in place, you will repay your debts sooner than you think. Opting for debt consolidation, especially when you have credit card debt, gives you a timeline within which you ought to have repaid your loan. You now have fixed monthly payments; therefore, you complete paying in a shorter period. 3.   Organize Your Finances It is, of course, tiresome to keep track of every single repayment you need to make. By consolidating all your loans, you only require to make monthly repayments which is much more convenient. Also, you pay a fixed amount each time; therefore, you know the amount to set aside every month. Generally, you can plan accordingly based on the amount you’re required to pay each month. This is also an ideal strategy to reduce the chances of late payments. 4.  Allows You to Select Your Loan Tenure There is a minimum amount to pay monthly in Singapore for credit cards. Failure to do so incurs a penalty. Now with a debt repayment loan, you have the freedom to select your own loan tenure. Therefore,it’s more practical to pay your debt without anyone rushing you since you set your timing alone. You can opt for a longer-term, which by the way, attracts higher interest rates, or a short one for lower rates – The choice is yours! Does a Debt Consolidation Loan Affect Your Credit Rating? To a large extent, yes! However, it will affect in a good way but with a few drawbacks. A debt consolidation loan is like any other loan you’ve been repaying. It can only improve your credit score rating if you pay on time and all the required amounts. On the other hand, with a debt consolidation loan, you are likely to get a bad credit rating. This is because credit scores mainly favour longer term loans with consistent repayment. However, your score will improve if you pay your loan in time. So Go Ahead and Get a Debt Consolidation Loan! It’s hard to evade loans in Singapore, especially now that the cost of living is skyrocketing. However, as you get the financing, ensure

Have you ever found yourself living from pay check to pay check? Well, if yes, you’re not alone. This is probably the life of every other Singapore resident! Saving most times becomes hard when responsibilities hit. You have to strive hard to pay every bill and keep yourself happy. Affording luxury can be a thing of the past when your pay slip barely covers your essential needs. However, the saviour for most people is loans! This will help you meet your financial obligations easily. Before taking a loan in Singapore, you need to keep some essential things in mind. This information will help you decide on the right loan, whether to borrow from a private loan lender or a bank, and more. Today’s article takes you through the necessary items you should do before taking a loan! Let’s dive in! Considering to Take a Loan? Check out these Essential Things! 1.    Assess Your Financial Situation First, you must check your financial situation before taking a loan. Can you afford to take the loan, and is the timing correct? These are simple but vital questions you should ask yourself before taking a loan. Loans really come through for us, but only when we are in dire need! Ask yourself whether it is indispensable for you to take the loan or not. If you have valid reasons, then go for it! Otherwise, if your situation is not urgent, look for other financing options other than loans. You should know that you are increasing your future debt by opting for a loan. Only take a loan when you are sure that you meet all the basic requirements and can manage to repay it seamlessly in the future. 2.  Check Your Credit Score Your creditworthiness is another crucial factor to consider before taking a loan. It typically determines whether you pay your credit obligations on time. You have a good credit score and a higher chance of securing a loan. Some lenders also look at your credit score to determine the interest rates to impose on you. You will likely get a loan at lower rates if you have a good score. 3.  DetermineThe Type of Loan After assessing your financial situation and creditworthiness, determine the type of loan you want. There are many types of loans available in Singapore that you can acquire. You might want a personal, car, business, payday loan, and more. So, your exact purpose for taking a loan should determine the kind you acquire. If you want to finance your business, then go for a business loan and if you are looking to purchase a car, go for a car loan. In short, be specific about your demands and understand the different functions of loans available in the market. 4.  Evaluate The Interest Rate After identifying the specific loan you want, check the interest rates. It determines the overall amount you pay back to your lender after acquiring the loan. You need to go through different creditors. Check the amount of loan they offer and the interest rates attached to them, then compare. Once you have all the necessary borrowing information, settle for the lender with favourable rates. 5.  Check Whether There Are Hidden Fees? In addition to the interest rate, you might incur other fees that you ought to know about. The licensed money lenders will charge you an administration fee which you only pay after loan approval. It’s also important to note that if you are dealing with a legit money lender, they will not ask for an annual fee. Furthermore, they will inform you of any costs you’ll incur in acquiring the loan. 6.  Ascertain on Collateral Requirements When getting your loan from a licensed lender, you must ask whether you’re required to produce any collateral. It technically acts as a security that you place upon getting a loan. Majorly collateral will come in the form of a secured loan. It applies to borrowers with a poor credit history. So your lender will demand an asset before giving you the loan just for security in case of loan default. On the other hand, if you have a good credit score, you will get an unsecured loan. It has no collateral requirements. 7.  Determine When Funds Will be Dispatched When borrowing, you need to consider the period you will receive your funds. The lender must clearly define when the loan is approved and sent to your account. Of course, the time taken to deliver the funds to you differs from lender to lender – So find out this information from your bank before applying for the loan. 8.  Determine the Loan Repayment Period Checking the loan term is a must for any borrower. The time your lender allows you to pay for the loan plays a massive role in determining the amount you’ll eventually pay. Figure out whether the loan you are about to take is long-term or short-term. In most cases, a long-term loan requires more time to repay and, at the same time, attracts a higher interest rate. Therefore, you end up paying more. On the other hand, if you choose a short-term loan, it means that you intend to repay it within the shortest time possible. You incur a lesser interest rate, so your overall debt won’t be as much. You need to check your current financial needs and the situations around you. This will tell you whether you require a longer-term or short-term loan. 9.  Check Instalments Required Instalments are pretty crucial in loans. Can you afford the said instalment for the particular loan you are about to take? If you can, well and good. However, if you feel you will struggle to raise the monthly amounts required, opt out of that loan! Again, your financial situation should guide you in determining whether you can pay the monthly instalments. Remember, failure to pay the loan at any point and time negatively affects your credit score. Go for a loan only for the right reasons