People take up personal loans for different reasons, but the best part will be that you do not have to divulge the purpose to the bank for taking the loan. Let’s take a look at the top 3 most common reasons why people might apply personal loans.
1. To start a business
Perhaps you want to venture into entrepreneurship. Perhaps you want another revenue stream. Whatever your motivation is to start your own business, not all of us have the funds for it. But that doesn’t mean your dream has to die there. One option is to take out a personal loan from the banks. You will be able to start returning back the money you’ve loaned once your business profits starts rolling in.
2. Paying off your credit card debts
A personal loan is unsecured and for that reason, it often comes with an interest rate greater than what you will find for a secured/traditional bank loan. Nevertheless, these rates are still lower than those for credit cards. Repaying off your credit card debt with a personal loan will definitely benefit you in terms of saving money. But just a little reminder, taking a personal loan should only be for necessities and when better options are not viable.
3. Advanced learning/further studies
You may find that you have not qualified for an education loan for various reasons. Perhaps you’ve exhausted the limit on your education loan or the course you are taking doesn’t qualify.
What you need to know about taking out personal plan
Most banks will look at your annual income and credit history to see if you qualify for a personal bank loan. These requirements can vary from bank to bank, and according to your residency status.
Personal Loan Requirements for Singaporeans and Permanent Residents:
In general, as long as you are employed, meet the annual income requirement, and have a good credit rating, you shouldn't have too much difficulty getting your loan.
✓ Be between the ages 21 - 65 years old
✓ Have a minimum gross annual income of S$20,000
✓ Photocopy of your NRIC, front and back
✓ Latest 12 months CPF Contribution History Statement
✓ Latest Income Tax Notice of Assessment
✓ Latest computerized pay slip
✓ Personal Loan Requirements for Foreigners
In general, foreigners need to be Employment Pass holders to qualify for a bank personal loan, as S Pass holders may not meet the minimum annual income requirement. It's best to call the bank of your choice and inquire about your eligibility, as this tends to vary by financial institution.
✓ Have a minimum gross annual income of $42,000
✓ An employment pass, with at least 6 months validity
✓ Latest computerized payslip or salary crediting to your bank account (in Singapore dollars)