For many Singaporeans, the only viable way to obtain the necessary funds for travel is via personal loans provided by private lenders. Here are the top reasons to consider the ongoing financial services of private money lenders:

1)   Fast Approval Times

Compared to conventional banks, which might take days or even weeks to review complex application forms, licensed private lenders can, in some cases, approve loans within 24 hours. Are you looking for quick cash for your travel-related purposes and you are not looking forward to waiting days on end for a bank response that might not even be favourable? In that case, the personal loans provided by private lenders might be a solution to consider.

2)   More Lenient Lending Conditions

Private lenders are typically more flexible when it comes to the conditions of the financial aid packages they offer. While a bank might require borrowers to pass credit score and income eligibility thresholds that are a barrier for a significant percentage of the SG population, private lenders are more likely to work with borrowers with less-than-ideal credit and are open to providing financial aid even to self-employed or freelance workers.

3)   More Flexibility

Private lenders often commercialise financial packages that are missing from the catalogue of large-scale Singaporean banks. Do you want, for example, to borrow a lump sum that can cover the educational pursuits of your children or your personal travel necessities? Well, with a bank, you might have trouble finding a loan that moulds to your exact requirements. With the options provided by private lenders, however, you have more flexibility.

How Can You Use Personal Loans for Travel Purposes?

There is one very good reason for considering short-term, unsecured personal loans in Singapore for travel-related purposes. Travel deals are often time-sensitive, and the offers you find right now, for your favourite holiday destination, might not be available in a week’s time, when you obtain the monetary infusion required for a deposit.

With private lenders, things remain simple: You apply for the loan, you receive your response in less than 48 hours, and once you sign the contract with the money provider, the sum you obtain is yours to do what you want.

Personal loan interest rates in Singapore are more convenient than in other neighbouring countries, the lending conditions applicable to domestic borrowers are favourable, and the rights of borrowers are protected by the Ministry of Law. Personal unsecured loans can be utilised to:

• Travel immediately without risking losing out on favourable holiday deals
• Cover upfront costs that otherwise would have impacted your savings
• Spread out your expenses and thus make room for flexibility in your travel arrangement
• Obtain the money required for an emergency fund that can cover unforeseen expenses

Of course, there can also be some downsides to consider. Personal loan interest rates, while often advantageous, are still worth analysing, and for some borrowers with existing loans in their name, taking on another monthly financial obligation might push their TDSR close to the limit taken into consideration by some private lenders when assessing borrowing eligibility. That said, for most Singaporean citizens, private, unsecured loans represent a flexible way to obtain the funds required either for personal expenses or investment purposes.

Are Personal Loan Interest Rates Advantageous?

Usually, yes. In Singapore, per the framework presented in the Moneylenders Act of 2008, the maximum personal loan interest rates applicable to unsecured or secured loans, regardless of whether the loan is provided by a bank or private lender, cannot exceed 4% per month. But a 4% per month interest rate is typically reserved for payday loans, which are unsecured, short-term financial aid packages that are characterised by low borrowing amounts and repayment periods shorter than one month.

Personal loan interest rates are more advantageous than this. However, the actual conditions of the credit package you obtain will depend on 1) your credit profile and 2) your overall monthly income. The interest rate associated with the personal loan could be charged at a flat rate, or it could be amortised and charged on the remaining balance.

For example, let’s say you take out a personal unsecured loan for $10,000, at a flat interest rate of 2%, no administration fee, and a repayment term of 12 months. In total, the interest will equate to $2,400, so, at the end of the year, you will need to pay back $12,400. That’s with a flat rate. However, with an amortised loan, the balance shrinks with each payment, and so, the loan, overall, will be cheaper.

How Much Can You Borrow with a Personal, Unsecured Loan?

Under the latest revision of the rules laid out in the Moneylenders Act of 2008, in order to be eligible for borrowing at least six times your monthly wage, your annual income will need to be at least $20,000. Technically, there is no low-income limit if you are to borrow sums that are less than $3,000 in total. That said, the vast majority of lenders will require you to earn at least the minimum income threshold required for six months’ worth of wage eligibility.

Can foreigners apply for the financial services provided by private lenders? Yes, but in their case, the income threshold required for obtaining a personal, unsecured loan will be a bit different. The maximum interest rates applicable to the loan packages commercialised by private lenders are capped in accordance with the framework laid out in the Moneylenders Act. Moreover, lenders cannot charge an administration fee for the contracted credit that exceeds 10% of the loan principal.

Lenders are also not permitted to charge insurance or membership fees associated with the loan package, or to pursue payment of any other charges outside those laid out in the contract terms. So, at least in SG, personal, unsecured loans are considered safe financial aid packages that are quickly rising in popularity.