Well, it is not the time to give up because your business needs to grow into the brand or multinational of your dreams. To help you out, here are some expert tips that you can use to increase the chances of approval for your business loan in Singapore.
Start by Building a Good Credit Record
When money lenders in Singapore assess loan applications, one of the things they give a lot of weight is the credit rating. This is a score that helps lenders to assess the risk of a borrower defaulting on loan repayment.
If the score is good, banks will consider the business to be responsible and trustworthy, and therefore, a low-risk party. To build a good score for your business, here are a few things that you should do:
- Clear the current debts.
- Maintain a good credit mix.
- Get your business credit report, check for errors (if any) and have them fixed.
- Take small loans and clear them promptly to build a positive credit history.
- Avoid making applications for loans in quick succession.
Have a Good Business Plan
Imagine you have two friends who are asking you to lend them some money. Would you lend the money to the one with a good plan for spending the money and repaying it or the other who is completely secretive? This same scenario applies to lenders when borrowers put forth applications for loans in Singapore.
When you develop a clear business plan, banks are able to see how the money will be spent, raising the chances of approval. For example, suppose your business has been relying on old machines in the production line.
Now you want to install new equipment to increase production, enhance efficiency, and meet the fast-growing demand. In such a case, the lender will find the application trustworthy. This gives the lender an impression that you know how to spend the funds wisely.
It will also be an excellent idea to indicate how the money will be repaid as you prepare the business plan. This is perhaps the most important part because the lender is also in business and wants you to clear the loan as agreed to make a profit through interest.
Apply for the Loan at the Right Time
Although you should be able to apply for a loan anytime and get the funds to grow your business, there are certain times that the risk of disapproval is pretty high and others low. When your business is rather unstable and volatile, there is a risk of the lenders opting out because of the “looming risk.” Many lenders often ask, “what if the business continues on a downward spiral and is finally unable to repay the loan?”
To avoid applying for a business loan in Singapore at the "wrong time," it will be a good idea to look far ahead and go for it when the business is doing okay. For example, if you want money to push the business through the upcoming high season in Christmas, it might be good to make an application early enough because you are not sure what might happen before that time.
These are some of the most important tips for you to consider, but there is one more thing; using lender comparison sites. The lovely thing about these sites is that they simplify the process of loan approval in Singapore and work with multiple lenders to increase the chances of approval. One of the top-rated lender comparison sites is Lendela, which uses matching apps to increase the chances of loan approval. They also ensure you get a loan with the best term and conditions, such as interest rates.
The Secret to Getting a Low-Interest Rate Personal Loan in Singapore
Finally, we have wrestled down the COVID-19 pandemic because vaccines are already available, but people have been left with serious financial challenges. After a long period out of work or with reduced pay, many people in Singapore are looking for low-interest loans to get back on their feet.
However, getting such low-interest credit is never easy, and some are having their applications rejected because of issues like a poor credit score. So, what is the best way to get a low-interest rate personal loan in Singapore?
Keep reading to learn more about personal loans in Singapore and the best strategies for securing credit at the lowest possible interest rates.
What is a Personal Loan?
A personal loan is a form of credit advanced by a lender to a borrower in a lump sum and then repaid in instalments. As the name suggests, a personal loan is borrowed for personal reasons. This is why the money is deposited into the borrower’s checking account.
Another important attribute of a personal loan is that it gives you absolute freedom on how to use the funds. This means that a personal loan is open, unlike a car loan or renovation loan, where funds are tied to specific uses. So, if you are a Singaporean and only wanted a personal loan to get the business back on its feet but now prefer purchasing a home asset, the lender will not come asking questions about it.
We also have to indicate that a personal loan is an unsecured form of credit. So, you will not need to have collateral to secure the loan.
How to Secure a Personal Loan with Low-Interest Rates
When making your application for a personal loan in Singapore, there are two main types of interest; advertised interest rate and annual percentage rate (APR). The advertised interest rate is the percentage that you will get most banks emphasizing in their ads. However, this rate is only used to calculate the amount you pay based on the principal. Therefore, it is not the best way to identify low-interest rate personal loans.
Instead of using the advertised rate, you should work with APR. This rate is calculated just like the advertised rate, but it also factors in other payment requirements for the loan. For example, if the personal loan attracts an administration fee or other charges, they will be included when calculating the APR. Note that the rate is calculated on a yearly basis.
Once you have understood the main types of interests charged on a personal loan, it is time to get into finer details of the loan. So, here are useful strategies to help you enjoy low-interest rate personal loans.
- Ensure your credit score is good: The interest rates that lenders attach to personal loans in Singapore largely depend on the borrower’s credit score. To enjoy low-interest personal loans, it is paramount to ensure your score is good. So, target to improve your score to the highest possible point, preferably as close as possible to 2,000.
- Negotiate for better rates: Although many people rarely use this channel to get better rates, it is indeed possible. If a lender is offering you a personal loan in Singapore with an interest rate of 5.1%, it might be possible to negotiate that downwards. Simply ask the bank for a review, and a drop, even if it is just 0.5% or 1%, might have a considerable impact on the amount payable by the close of the loan term.
- Only work with lenders having low-interest rates: When lenders advertise personal loans in Singapore, they have varying interest rates. Therefore, you need to compare them and single out the one with the lowest interest. For example, online moneylenders usually have lower interest rates compared to conventional banks in Singapore.
- Use loan comparison sites: This is probably the simplest yet straightforward method of pinpointing the lender with the lowest rates. Loan comparison sites, such as Lendela, forward your loan application to different lenders, making it easy to see the ones with lower interest rates. They also make the process of application easy and help borrowers to avoid loan sharks or ah-longs.
When looking for a low-interest rate personal loan in Singapore, the tips we have brought out in this post are all you need. Remember that no matter the interest rate of the loan, it is paramount to have a clear repayment plan. This will help you to avoid defaulting and causing damage to your financial health.
