Current Unsecured Personal Loan Rates – What types of loans are available in Singapore? Here is a video of some of the main ones.
Both individuals and companies, do you know what the cheapest type of financing is and are there any conditions for it?
Current Unsecured Personal Loan Rates
Let’s face it, not all loans are created equal. Why is the interest rate of some loans higher and why lower? This is because some borrowers are less risky than others, while some are very risk-averse and can take the money and run, so the different interest charges just reflect the different risks that the loan carries. has a donor
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What are the types of loans in Singapore? What is the cheapest form of financing and interest in the world? How to make the right decision about the amount of loan payment?
We reject the renovation loan because the approved amount is very small, and we reject the education loan because of another nature.
Image credit: Common types of loans available in Singapore and estimated financing costs, slides presented at a joint event with the Singapore Credit Bureau, iCompareLoan
Parent loans are usually the best. Parents are generally very bad bankers, can’t count and are bad credit officers. Most personal loans offer zero interest rates, no fixed repayment period, no obligation to pay, and no debt.
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Secured loans are all those loans that are backed by assets and will be cheaper compared to loans that are unsecured and only backed by reputation, etc.
The next cheapest loan is in the form of a mortgage. This is because in Singapore, a house is valued at $1 million and only $750,000 is borrowed (July 2018). Even if the borrower defaults, the property can easily be foreclosed for $950,000 or more, meaning the lender is virtually assured of equity. Currently, most banks do not set different prices for home loans for personal use and investment. If banks price their mortgages differently, I would expect investment mortgages to be more expensive than owner-occupied units.
CIP loans, or commonly referred to as commercial real estate loans by private individuals, mostly refer to loans for retail, office, and industrial properties. These loans are backed by real estate as an asset.
Offices: Office units inside the building, which are usually located on higher floors without entrances. Some offices are located on the second and third floors of shops, while others are administrative offices combined with retail.
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Industrial: Industrial properties generally have 2 types. B1 and B2. B1 refers to light industrial units in which the participation and establishment of light industries and low-polluting industries are allowed, while B2 refers to units that have heavy industries with higher pollution levels such as noise, dust, chemicals or dangerous substances. , dangerous and a big car, etc. There are HDB industrial properties, JTC industrial properties. Those that are JTC’s industrial property are often classified as B2.
And those used for personal use are approved for higher loan amounts and potentially cheaper rates, while those used for investment offer lower loan amounts and often slightly higher rates due to the risk of leasing and therefore the ability to repay the loan. be. .
Car loans are also secured loans. They are secured by vehicles and are also considered safe for banks. That is why their interest rates are low.
Car loans are usually divided into the following categories for passenger cars (i.e. sedans or SUVs):
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Commercial vehicle loans will be more complicated and have higher interest costs. The loan can be from a bank or credit company. Many loan companies are also licensed to lend and provide money for car loans or short-term loans. Commercial vehicle loans are more expensive than passenger car loans.
It is worth noting that lending companies play an important role in handling bank paperwork for car loans.
There is a lot of talk about microloans for small and medium businesses, but to qualify, companies must meet certain criteria. Registered and operating in Singapore, preferably 2 years, minimum 30% local equity, annual sales up to S$1 million or maximum 10 employees. However, this range is for day-to-day operations and factory automation and upgrades. Most companies that apply don’t get $100,000, many that are lucky end up getting between $20,000 and $30,000.
Often you run a small company, you have already maxed out your company credit. Maybe this year your company is not profitable, you need some funds to get through a difficult period.
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If you have enough income, you can consider a term loan from your current residential property. Entrepreneurs often do not declare enough income and furthermore, self-employment income is treated with a 30% haircut, making it difficult to pass the TDSR.
If you have a paid-off property or a property with very little outstanding credit, you can pledge your property to a bank/financial institution or corporate lenders who may lend to you to expand your business.
Interest rate range: 6% to 12% + administrative fees + legal fees + assessment and processing fees. (Loan brokers typically charge 2-5% to help manage this process)
The SME Working Capital Loan is a government funding scheme from Spring Singapore. The government jointly shares the potential risks of non-payment with the banks so that the banks are more willing to lend to the companies. It is available until May 2019. You can’t just walk in and ask for $300,000 and get it, it depends on your profitability, cash flow and credit status.
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For companies that have already used cheaper sources of finance such as SME working capital loans and still need more financing, they can use an unsecured business loan for expansion. Some companies that are larger may not qualify for an SME working capital loan, they can use an unsecured business loan. Note that spreads vary greatly depending on the credit quality of the company.
This is the most traditional form of lender. You can borrow Rolex or gold chains or precious jewelry.
Personal loans are also a good source of temporary financing for small business owners. Interest rates are in a wide range. However, the maximum unsecured loan a person can borrow is 12 times their monthly income as of January 2019. You can only avail a personal loan if you earn more than $30,000 (Singapore) or $60,000 (Singapore PR or EP) per year. Not all conditions are met for personal loans from banks.
These platforms usually take time to raise enough capital. And the rate of increase in debt is usually very slow. Additionally, this is more public in nature, while some say it acts as a form of branding to raise the borrower’s profile, some businesses may not feel that way.
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Banks offer factoring, and corporate financiers give you a discount on the invoice they finance for the goods and services you’ve sold to a qualified buyer. Businesses need this type of financing when the companies they supply tend to pay slowly or have long credit terms. In some industries, late payment is an industry practice. Let’s say you sell $100,000 worth of merchandise (your costs are $70,000 and you earn $30,000), but the customer doesn’t pay you for 180 days. So, to get the next batch of business, you must first pay for another $70,000 of goods and then sell them for $100,000. You can then sell your $100,000 invoice to the bank at a discount of $95,000 and get your money up front so you can make more money. Usually some kind of commitment or guarantee is required from the managers.
The bank first lends you the money, but you are still liable if the customer defaults. This method is called regression.
There is another method where the bank/financial holder simply buys your invoice at a discount and bears the default risks, this method is called the “no recourse method”. It is more expensive and usually on a transaction basis. It can cost up to 8% per transaction.
Interest rate range: 1.5% to 3.5% per month for up to 180 days, some fees are based on 5 to 8% per transaction, so it can be 20% to 40% per year or even more.
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A business may need funds from time to time, such as bidding for a project and needing a project deposit, making immediate payments to suppliers or participating in a venture. This funding is needed very quickly and is a large amount. These types of loans are usually provided by lending companies or alternative corporate finance providers. As companies usually do not have enough revenue or may not be very profitable to qualify for huge funds and different types of loans.
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