One literally gets an unsecured personal loan on their signature alone. It is easy to see why lenders in Singapore offering such loans have pretty stringent guidelines.
What Do Lenders Worry?
With home equity loans, as with car loans, there is property available to the lender should the borrower default in repayment. They can take possession of the car or the real estate. With a signature loan, the only avenue open should default occur is the filing of a lawsuit. Certainly, a lender may well win possession of personal property or wage garnishment as a result of the suit, but this is not always a cut and dried matter. In most jurisdictions, wage garnishment is an option available only for child support cases. Also, lawsuits in Singapore are expensive and time consuming, so a potential lender needs a lot of assurance that the borrower will pay in full with a reasonable interest rate, too.
What Are the Underwriting Guidelines?
So, with no wage garnishment assured, the lender is in a financially vulnerable situation when it comes to signature loans. The lenders therefore only expose themselves to this vulnerability by assuring that receivers of these financial instruments have a good level of financial stability, an excellent credit report, as well as an existing debt level that is manageable even after the signature loan is added. Of course, the particulars of these guidelines vary from lender to lender. And the amount traditional lenders are willing to offer for these types of loans can be as small as $5,000. Sometimes, a pre-existing personal relationship between the borrower and the lender may facilitate the availability of these loans. But still, financial assets, career longevity, good credit, and low debt/income ratio are still very much required.
What Does a Poor Credit Borrower Do?
Securing a loan such as those mentioned above is a pretty bleak prospect for folks with poor credit. Well, there are licensed finance companies in Singapore such as Easy Credit Licensed Money Lender that specialize in loans for these folks and they require no credit check; so a credit history is of little consequence to the borrower or the lender. Of course, with these companies arguing about risk, interest rates will be a good 10 percent higher than market rates.
In certain cases, some poor credit borrowers may qualify for a loan up to $20,000. Terms asking a one to two year repayment rate can be found. Be sure to research the market extensively, looking for terms and interest that are affordable. Another option would be cash advance or pay day loans. They require no credit check. Here again, these loans are high risk and exhibit the high interest rates typical of high risk loans. These are usually sought by folks who have immediate cash-flow issues.
Do Not Give Up!
While unsecured loans offering large loans are hard to come by in Singapore, researching the market, being cautious will eventually lead you to find a loan package that meets your needs.