Applying for a personal loan in Singapore has become common practice, especially with the harsh economic times that we live in today. However, not all loan applicants succeed. If this is the case for you, you may be wondering what you’re doing wrong.
Well, you’re not alone. A licensed moneylender in Singapore will look at much more than just your credit score to determine whether you are eligible for a personal loan. Here are the top 5 factors that moneylenders in Singapore use to determine your loan application status:
1. Credit score
Of course, this is what most moneylenders check first before going further with your loan application process. Your credit score gives moneylenders a detailed report of how you manage borrowed money. In most instances, you will get your loan application approved if you have a good credit score.
If, however, you have a poor credit score, then moneylenders perceive you as high risk and will likely decline your application.
2. Debt-to-income ratio
This process basically involves looking into your monthly debt commitments as a percentage to your total monthly income. Moneylenders will be more obliged to offer loans to borrowers with low debt-to-income ratios.
Most lenders, however, will likely turn you down if you have a high debt-to-income ratio rather than take the risk.
3. Income and employment history
A licensed moneylender in Singapore will also want to know that you can comfortably repay the money you plan to borrow. Providing evidence of sufficient and consistent income is one way of putting lenders’ worries at rest.
It’s also vital to note that income requirements vary from one moneylender to another and depend on the amount you want to borrow. Typically, moneylenders will want to see a higher income statement if you’re borrowing more money.
4. Loan term
Financial circumstances change with time, especially over long periods, say ten years or more. Your financial situation could change a lot within this period. Sometimes, these changes are positive.
If, however, they change for the worst, then you may struggle to pay back the borrowed amount. That’s why moneylenders feel more comfortable lending to borrowers with shorter loan terms.
5. Liquid assets
Personal loan moneylenders favour borrowers who have some cash in savings or assets. This reassures them that you’ll still be able to pay the loan amount in case of any temporary setback.
Understanding the factors mentioned above could help increase the chances of your loan application being successful. To find out more about making a successful loan application, contact us at One Money today.