Banks and financial institutions are eager to grant personal loans as it is one of their primary revenue sources. However, they must also ensure that borrowers can repay the loans in a timely manner. Consequently, loan applications are subject to strict evaluation based on specific criteria. Not every application will be approved, especially if there are eligibility mismatches or missing documents. To increase your chances of securing the personal loan you need, here are five crucial factors to watch out for:
- Check Your Eligibility: Personal loans have basic requirements, and failing to meet them is a common reason for rejections. Income level is a significant eligibility criterion, which varies among lenders and based on your citizenship status. Banks typically require a minimum annual income of $20,000 or $30,000 for Singaporeans, while foreigners may need a higher income. However, online lending platforms and licensed moneylenders often have lower income requirements, making personal loans more accessible to those who don’t meet bank criteria. Additionally, citizenship status can impact loan approval, as some lenders only offer loans to citizens or permanent residents.
- Ensure You’re Not Overly Indebted: In Singapore, borrowers are limited to unsecured loans equivalent to 12 times their monthly income, including credit card balances and other outstanding loans. If your personal loan application would exceed this limit, it may be rejected, or you might only receive a smaller loan amount up to your personal unsecured loan limit. Therefore, it’s advisable to check your remaining unsecured debt limit to ensure you can obtain the desired loan amount. Paying off existing credit card balances or other loans can help keep your debt level low and manageable.
- Improve Your Credit Rating: Your credit rating plays a crucial role in determining your creditworthiness. A moderate or poor credit rating can lead to higher interest rates or loan rejections. Maintaining a good credit rating requires meeting your debt obligations, including paying loan installments and credit card bills on time, and avoiding carrying balances. If you suspect your credit rating is suboptimal, making timely payments over the next several months can help demonstrate fiscal responsibility and improve your chances of loan approval.
- Find a Co-signer or Guarantor: Some loans, such as renovation loans, allow joint applicants. In such cases, only one applicant needs to meet the eligibility requirements, making it possible to obtain a personal loan even if you don’t qualify individually. Alternatively, a loan guarantor may be required, particularly for education loans when the applicant alone may not meet the eligibility criteria. It’s essential to have open conversations about the risks involved with co-signers and guarantors, as they share responsibility for the loan.
- Limit Your Loan Amount: Increasing your chances of loan approval can be achieved by keeping the loan amount small. Larger loans pose higher risk to lenders, making them more challenging to obtain. By borrowing only what you need, you can reduce the inherent risk and improve the likelihood of loan approval. Remember, responsible borrowing helps prevent excessive debt burdens. If necessary, consider consolidating your debts to ensure manageability.
At SU Credit, we understand the significance of securing personal loans when you need them. While meeting the eligibility criteria and maintaining a good credit rating are important, it’s also crucial to choose the right lender and loan product that best aligns with your financial needs. For personalized assistance and recommendations on personal loans, our team of financial consultants is available to guide you through the process.
Contact us at our main office located at 175 Bencoolen Street #01-36, Singapore 189649. You can reach us by phone at 6636 5644 or via email at enquiry@sucredit.com.sg. Let us help you navigate the personal loan landscape and secure the funding you require.
