If you’re a permanent resident in Singapore who hit a rough patch, you’ve probably heard of borrowing money from legitimate money lenders. The question is, can you? Fortunately, the short answer is yes. But of course, there is more to it than that. SInce you are a not a citizen, the loans you can apply for are different, and it’s important for you to understand that.

Here are the type of loans you are qualified to apply for, what lenders look out for when approving loans, and ways of improving your chances of getting loans. Knowing these things will help you navigate the process of loan application and make informed choices about your finances by the end. 

Types of Loans Available for Permanent Residents

Permanent residents can apply for various types of loans, all with a different purpose. Here is the breakdown of the most common loan types:

1. Personal Loans

Personal loans are versatile financial products used for various purposes, such as debt consolidation, holiday financing, or other types of expenses that may suddenly appear. Banks and other financial institutions provide permanent residents with personal loans on certain conditions. You generally need to have a provable, stable source of income, a decent employment history, and a good credit score. The interest rates on personal loans may either be fixed or variable based on the lender and your financial profile.

2. Home Loans

Home loans, more commonly known as mortgages, are used to purchase property. With most banks and other financial institutions, being a permanent resident will only qualify you for home loans. Your credit rating, level of income, and employment are things that the lender will look at before passing out your loan. You are likely to also pay a down payment, which varies from one lender to another on the value of your prospective property. Sometimes, higher down payments can attract even better terms of the loan and reduced interest rates.

3. Car Loans

These are used in purchasing a car. This kind of loan is provided by the bank, credit union, and sometimes even car dealers. To acquire a car loan, one needs to provide proof of income, a valid driving license, and a good credit history. The majority of car loans have fixed interest rates with flexible repayment periods according to your financial situation.

4. Student Loans

Student loans are available to aid in shouldering tuition and other related fees for those who want to pursue a higher level of education. Educational institutions or financial institutions that have student loan programs can provide these loans. Permanent residents can avail of these as long as they are qualified in the requirements set by lending institutions.

Factors to Note in Availing of a Loan

Getting approval for a loan requires much more than an application. There are various factors that lenders consider to qualify you for a loan. Here is what you need to know:

1. Credit Score

Your credit score is relevant to your getting approval for a loan. It represents your creditworthiness and your responsible behavior in managing your money. Generally, the higher your credit score, the better your chances of getting approval for a loan, often at interest rates that are more reasonable. It always helps to check your credit report once in a while for any mistakes and rectify them to maintain good credit scores.

2. Income and Employment

Most lenders want to see that you have some sort of reliable income source that will help you to repay the loan. This requires you to prove your income through recent payslips or tax returns. A stable employment history also works in your favor since this proves one’s ability to handle long-term financial commitments.

3. Debt-to-Income Ratio

The debt-to-income ratio is the total of your monthly debt payments in comparison to your monthly income. This percentage lets lenders know your ability to manage more debt. A lower ratio is always preferable since it explains that you have a manageable level of current debt and are less of a risk to lenders.

4. Down Payment

Some loans, such as mortgage or auto, may require a down payment. Again, how much of the down payment depends on the lender and the kind of loan. The more significant the down payment, the less the loan amount, and sometimes more desirable interest rates are offered for larger down payments.

How to Make a Stronger Loan Application

It’s possible to enhance your chances of approval by improving your credit score. Try to pay off all your outstanding debts, and avoid late payments. Avail of credit-scoring services to be in a better position to track your score and rectify any inaccuracies in the credit report.

• Save for Down Payment

If your loan requires a down payment, start saving well in advance. The more that you can provide as a down payment, the less you’ll have to borrow. This might mean better terms on the loan and possibly better interest rates.

• Collect All Your Documents

You can also hasten the application by having all your documents in order way ahead. Make sure you have documents to prove your identity, your income, and your employment record among others as may be required by the lender. This shall keep you organized and help you glide through more smoothly and quickly.

• Consider a Co-Signer

If your credit or income is not strong enough, consider getting a co-signer with a stronger financial background to co-sign the loan. A co-signer may boost your chances of getting approved, but be warned that they bear the responsibility of the loan in case you default. Ask an Ubi money lender or lenders in other areas of Singapore for more details.

Conclusion

Taking a loan in Singapore as a permanent resident requires preparation and knowledge of the correct process of lending. If you can achieve and maintain a good credit rating, save for down payments, and have your documents in order, your loans are more likely to be approved. .