Are you a Singaporean and looking for a way to get a loan at the lowest possible rates? One of the methods that you can use is taking a secured loan. Unlike unsecured credit where the lender relies on the applicant’s credit score to determine the interest rates, the collateral you use helps cut down the risk taken by the lender. For example, a bank will not have to worry much about the borrower defaulting because it would simply sell his car or attached asset.
Secured loans in Singapore come with unique benefits, but the risk of losing your asset always looms. So, is it a good option for you?
What is a Secured Loan in Singapore?
A secured loan means that you borrow money against a selected personal asset. If you want to get more money, you have to put in a high-value asset. For example, a person who attaches his prime bungalow will be able to access more funds compared to another who only attaches an undeveloped plot.
In addition to the collateral, the lender will also want to know that you can comfortably pay the loan if it is approved. If you do not have any means of income, many are the lenders who will decline the application. Although lenders will not largely rely on your credit score to determine the interest rate, they still check how creditworthy you are.
Common Assets You Can Use as Collateral
Check out the following category of assets that you can use as collateral when taking a secured loan in Singapore.
- Home equity.
- Heavy machinery.
- Shipping vessel.
What You Need to Do When Taking a Secured Loan
As you can see, there is a full list of assets that can be used as collateral for your secured loan. However, you need to be aware of the risk of losing the asset if you fail to pay. To clear the loan fast and avoid your asset getting lost, here are the three most important things that you need to do.
- Develop a good loan repayment strategy. You might want to prioritize the secured loans compared to unsecured ones because of the risk involved.
- Make sure the monthly payments are submitted on time to avoid penalties and damage to your credit score. It might be a good idea to ask your bank to deduct the money for secured loan payment and remit it to the lender to avoid forgetting.
- Consider austerity measures. If you are having cash flow issues, it might be a good idea to relook at your budget to initiate some cost-cutting efforts and direct the cash into paying the loan.
What is the Best Way to Apply for a Secured Loan?
Applying for a secured loan in Singapore requires you to identify what different lenders’ requirements are and determine whether you meet them. This can be challenging because different lenders have varying conditions that applicants must meet. It can take a lot of time, especially when you decide to target different lenders, trying to identify the one with better terms and conditions. The best way to apply and increase your chances of getting the loan approved is by using Lendela.
Lendela is a lender comparison site that is dedicated to ensuring applicants do not waste a lot of time trying just to get their application through. All that you need to do is visit their website to make a short application, and it will be forwarded to multiple lenders. Once Lenders give offers, pick one, and an appointment for you to sign the loan is booked. Make sure to pay the loan for the entire term.
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