Taking a loan is a big step. Before you take a loan in Singapore, you need to check the type of loan available. Lending is a wide concept. There are multiple types of loans available in the market. You will get a loan for every requirement.
For example, if you want a car but don’t have enough cash, you can get a loan. To buy a car you can take car loans. Every institution offers different types of loans. You need to know about all these types so that you can get the best deal.
If you are planning to buy a house, you can take house loans instead of going for personal loans. The interest will be less, and you can loan a higher amount.
Types of Loans in Singapore:
Singapore is a well-developed country with a high-tech business organization. To suffice the needs of the citizens, banks and other financial institutions provide different types of loans. You can take all these loans in Singapore.
- Personal Loan:
It is one of the most common types of loans you can get. As the name goes, you can take this loan for personal financial needs. If you face a medical emergency or need sudden cash for investment, this is a good choice. These loans are unsecured, which means there is no need for collateral security. Anyone can apply for this loan as there documentation process is quite simple. You only need to show proof of your income statement and credit score.
There are two types of personal loans you can apply for. One is a term loan, and the other is a line of credit. In terms of the loan, you have to pay a fixed amount of money every month to the bank for a fixed period. For a line of credit loan, the bank will transfer the money to your account. You can use portions of the credit and pay monthly interest to pay it back.
The loan limit is 12 X Income. You can get this loan if you earn $30,000 every year. The interest rate can vary from 9% to 18%.
- Home Loan:
Another common type of loan is a home loan. No matter what you do for a living, a home is a critical piece of asset. Many people who cannot afford to buy a house in one go, use a home loan to buy a house.
You can only get loans on the eligible property. Home loan differs from one bank to another. The amount of the loan, interest rate, and period determine your monthly installment.
Before you take a home loan, you need to check with all the banks. Compare the loans and get the best deal. As it is mostly a long term loan, you need to consider all the other options. It is one of the cheapest types of loans with an interest rate below 5%.
- Renovation Loan:
If you own a large property but don’t have the cash to maintain or repair it, you can take a renovation loan. This type of loan helps you to pay for renovation and repairs. It is not a large sum of money because you are not buying a house, repairing it. It range from $10,000 to $30,000. The period can be from 1 to 5 years. The interest rate can be from 3% to 6%. This loan is perfect for you if you wish to live in a lavish house. Each bank offers different services. You can check with multiple banks and go with the best option.
- Car Loan:
This loan is for vehicles. If you want any vehicle, you can get this loan. You will get a loan of about 60% of the total price. It is less than $20,000. It is mostly a short term loan that you need to pay before five years. The interest rate can be 2% to 9%.
- Education Loan:
Mostly students or parents go for this type of loan to pay for school and colleges. This loan is flexible. The interest rate is also less than other loans. If you are currently studying, you can pay monthly installments.
- SME Micro Loan:
The amount of this loan is less than $100,000. You can get this loan for funding your micro business. You have to fulfill all the criteria to become eligible for this loan. Your business should be registered. It should be in Singapore. Your company should be two years old. The interest rate can vary from 3.2 to 4.7%. Different banks offer different types of business loans. Apply for the loan after business loan comparison.
- SME Loan (Secure):
This loan is again from the SME business. However, this type of loan is secure. If your loan limit is over and you want another loan, you can take this loan. You can use a property you own to get this loan. You have to pay a lot of fees along with the normal interest rate.
- SME Working Capital Loan:
This type of loan is for assistance. The government provides this loan to support SME. This loan is easy to get because the government takes up partial risk. You can get a loan of up to $300,000. The amount differs based on your profit, cash flow, and credit score. The interest rate can vary from 6.5% to 8.5%.
- Business Term Loan (Unsecure):
Another type of loan you can get for your business is a term loan, which is not secure. If you have taken all the other types of loan for business but still needs more money, it is perfect for you. It is only for small companies. The loan amount depends on the credit score of your company. The interest is higher. It varies from 8% to 15%.
- Commercial and Industrial Property Loan:
These loans are not for housing property. You can take this loan if you want money for a commercial property like retail shops and industries. The interest rate is low, but you have to follow different interest plans as per the property.
These are the ten types of loans you can get in Singapore. So next time you need a loan, check all the possible types of loans to get the lowest rate of interest.