Personal loan for the people drawing less income

Most of the Singapore banks target mainly on the well paid employees for a personalloan, while the people drawing less income are often desperate. Many traditional micro financing institutions may cover low income sector of people, yet with a higher rate of interest. However, some banks in Singapore like Citibank offer instant personal loans for the people with low income because the emergency expenses like medical bills, weddings, repairs, renovation, etc., happen even to them.

Apart from the low income generators, the small businessmen experience unpredictable payments from clients. Although the income is certain, the time or the amount may be unknown. Similarly, perhaps the bonus amount is unknown for the employees and under such indecisive situations, the Singaporeans can benefit from the Citibank Singapore Ready Credit Scheme. The new Citibank customers can take advantage of 4.83% per annum interest rate for the loan for 3 years.

Singaporeans with the annual income as low as S$30,000 (S$42,000 for expatriates) can avail instant loan from the Citibank Singapore Ready Credit Scheme. Further, 4 times the monthly income can be availed as the credit line. Besides offering an instant loan approval within one hour of time, the interest rate is nominal and it decreases as the tenure increases.

Around the world, 1% cash discount can be availed on the retail purchases by using the Citibank Ready Credit Card. Moreover, online fund transfer and balance transfer (at a nominal interest rate) facilities are also allowed.

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Getting a Loan from a Bank even with Bad Credit

Whether you want to meet a short-term expense like buying home appliances, going on a vacation or dealing with an emergency or you want to meet a long-term expense like acquiring an asset like a property, a condo or a car, as a typical Singaporean you will turn to a bank for a personal loan, a home loan, an auto loan or any other credit facility.

Which is why the consumer lending statistics published by the Monetary Authority of Singapore for the month of August 2016* indicate total consumer loans at S$ 246,533.4 million!

However, getting a loan can potentially run into a major stumbling block – bad credit scores. Let us explore this topic in a little more detail:

What is a credit report#?

When you apply for a loan, the bank to which you’ve applied will check your creditworthiness before it decides whether to extend a loan to you. Your creditworthiness is determined by your credit report. Your credit report will usually contain the following:

▪ Your personal data – Information such as your name, NRIC & date of birth
▪ Your current credit relationship summary – Summary of the number of credit facilities you hold & any defaults thereon
▪ Your credit facilities information – Information on the credit facilities you have with the bureau’s members & your repayment history for the last 12 months
▪ Inquiries summary – Number & type of inquiries by financial institutions into your credit report
▪ Default records – Information on any default in repaying your credit facilities, including the balance outstanding & the current status of the account
▪ Bankruptcy records – Information on whether any bankruptcy proceedings have been taken against you, obtained from the Insolvency and Public Trustees Office & displayed for 5 years from the date of discharge

Who provides your credit report?

There are only 2 credit bureaus that have been accredited by the Monetary Authority of Singapore (MAS) – Credit Bureau Singapore (CBS) and DP Credit Bureau (DPCB). Only these organizations can provide you with your credit report.

How can you view your credit report?

You can buy your credit report from the two recognized bureaus either online or by visiting the bureaus at their offices. You will need your SingPass ID and password. You may also need to pay transaction fees for purchasing your credit report.

You can also consider monitoring your credit score by subscribing to the “My Credit Monitor (MCM) service offered by CBS. This service alerts you to any suspicious activities like identity theft or changes that can affect your credit reputation. You can sign up for it at any Singapore Post branch or at CBS’ main office.

Why do I need my credit report?

Your credit report will help you understand whether your credit worthiness (or credit score) is high or not. When you know your credit score is high you can safely apply for that loan; when your credit score is bad, you will need to take corrective action to avoid your loan application from getting rejected or getting an approval for a lesser loan amount.

Should there be discrepancies, or if you disagree with some information in your credit report, you can write to the respective credit bureaus with your clarifications. A notice will be posted in your credit file while the credit bureau investigates. If an amendment is subsequently made, a revised report will be sent to all credit bureau members who have made inquiries on you in the past 3 months.

What can I do to bring my credit score up again^?

Take these broad tips into consideration as you go about repairing your credit score:

▪ Repay outstanding/overdue credit on time
▪ Keep the number of credit facilities manageable
▪ Clear bankruptcy / litigation
▪ Check your consumer credit report regularly (at least annually) to ensure there are no errors reported. This is especially important when you intend to apply for new loans or credit facilities.

* This includes the following categories: housing and bridging loans, car loans, credit cards, share financing and others.
# Data source: eCitizen portal of the Government of Singapore.
^ Data source: DP Credit Bureau Singapore.

Questions to Ask about Home Loans

A home loan represents a major financial commitment, sometimes the largest financial commitment a home buyer like you may take on during your lifetime. Given the significance it is important that you stay prepared when about to take on a home loan. These questions will hopefully help you gauge your preparedness:

Are you Ready?

We are talking about financial preparedness here. You can measure your financial readiness through the following measures:

TDSR

The Total Debt Servicing Ratio is the ratio of your income and liabilities. The Monetary Authority of Singapore (MAS) had, in June 2013, capped TDSR on property loans to 60% to encourage prudent borrowing. Your consolidated debt repayments including your home loan repayment, car loans, renovation loans, study loans, credit card loans and other secured or unsecured loans cannot exceed 60%. And, incomes that include variable components are subject to prescribed haircuts before TDSR is applied.

LTV

The Loan-to-Value ratio is the amount of loan taken out on a property in relation to its value expressed as a percentage. Since the introduction of the TDSR framework for property loans by the MAS, which came into effect from the 29th of June 2013, the maximum Loan to Value (LTV) that can be borrowed is 90%. LTV will vary based on different scenarios.

Credit Score

Get to know your credit score by applying for it along with the relevant fee. The higher your score the better the chances of your getting that housing loan. There are only two bureaus gazetted by the Monetary Authority of Singapore (MAS): the Credit Bureau (Singapore) Pte Ltd and the DP Credit Bureau Pte Ltd.

Do I Need to Know about Refinancing?

Yes. Refinancing, when smartly used, comes with a number of benefits that can help you deal with your current financial situation better. Refinancing refers to switching your existing home loan to a different financial institution usually to benefit from lower interest rates.

But before you refinance check out Notice 632 penalties; these can be levied if you are still in the lock-in or claw-back period. Try and refinance only if you get a rate that is low enough to offset the penalties imposed or sit tight and wait out your lock-in period.

In September 2016, the MAS fine-tuned* the TDSR Rules especially with regard to refinancing to allow borrowers more flexibility in managing their debt obligations. As per this new measure, the MAS has exempted the refinancing of owner-occupied housing loans and investment property loans from the TDSR framework subject to certain financial prudence-related conditions.

Do you need Expert Advice?

It sometimes happens that the sheer amount of detailing and fine print associated with housing loans and the whole process of selecting a home and getting a loan can overwhelm even the best of us. In such a case try taking the help of an expert. Just make sure that they are suitably certified; if, for instance, you are approaching a financial adviser make sure that s/he is qualified under the Financial Advisers Act.

What we’ve covered here merely represents a microcosm of the home loan universe. Use these tips as a starting point and dive in, start exploring and take every possible opportunity to expand your knowledge.

* Data source: Monetary Authority of Singapore – TDSR Rules on Refinancing Fine-tuned.