Life is always unpredictable, and there may be times when you need to take up a loan to tide through unexpected financial difficulties. It could be medical emergencies, debts, bills to pay, or simply urgent cash needs. And if you’re unemployed, getting a personal loan in Singapore can be difficult.
In Singapore, banks and financial institutions will look at your income when deciding if they should approve your loan. Doing so allows them to determine your ability to repay the loan.
However, it doesn’t mean that it’s impossible to get a personal loan in Singapore when you’re unemployed. In this article, we’ll be sharing 5 tips that can help you improve the situation and secure a personal loan in Singapore.
1. Maintain A Good Credit Score
Having a good credit score can help you secure the personal loan you need in Singapore, even if you’re unemployed.
A credit score is a number that banks and licensed moneylenders look at when assessing your loan application, although licensed moneylenders don’t scrutinise this as much. A credit score is based on data such as the consumer’s credit history, accounts, track record, and payment history.
If you’ve been making timely loan repayments and don’t have a lot of open credit facilities, you’re more likely to have a good credit score. On the other hand, if you have been missing out on loan repayments (or even defaulted on your repayments before), chances are you’ll have a poor credit score.
Here’s how the CBS credit scores look like:
|Score Range||Risk Grade||Probability of Default|
|1911 – 2000||AA||0.00%||0.27%|
|1844 – 1910||BB||0.27%||0.67%|
|1825 – 1843||CC||0.67%||0.88%|
|1813 – 1824||DD||0.88%||1.03%|
|1782 – 1812||EE||1.03%||1.58%|
|1755 – 1781||FF||1.58%||2.28%|
|1724 – 1754||GG||2.28%||3.46%|
|1000 – 1723||HH||3.46%||100.00%|
Source: Credit Bureau Singapore
Credit scores play a key role in loan approvals. Having a good credit score will assure lenders that you can repay the loan on time and that you’re a responsible borrower.
It helps to give banks and licensed moneylenders the trust they need to lend you the money. If you’re unemployed but have a good credit history, your chances of getting a personal loan in Singapore will be higher.
2. Get Other Sources Of Income
It’s important to note that you don’t need to be employed full-time to apply for a personal loan. Part-time jobs, contractual jobs, or freelance work can be considered as well.
If you have a part-time job, that also makes you eligible for a personal loan in Singapore. As long as you have incoming money, it’s considered a source of income.
With the COVID-19 social distancing measures in Singapore, more part-time jobs are becoming available. For example, there are lots of security checks and temperature takers in front of shopping malls and public areas. Although these jobs are temporary, the pay is decent at S$8/hour to S$12/hour.
It’s also a plus point if you have a source of stable passive income. Passive income can come from room rentals or your investments.
In addition, you can consider securing contract jobs or freelance work to generate income and back up your application.
For example, if you’re skilled in using Adobe Photoshop or Premiere Pro Professional Video Editor, you may be able to secure freelance jobs online. Some of these jobs provide decent pay which can help you get through tough times and might even enhance your portfolio.
Be flexible and open, and you might just be able to find jobs that can help you support your loan application.
3. Consider Getting Secured Loans
Most personal loans offered by banks and licensed moneylenders in Singapore are unsecured loans. This means that they don’t require collateral, and are typically approved based on your credit score and income.
This makes unsecured loans popular in Singapore, as fewer documents are needed for the application.
However, if you’re unemployed and don’t have sufficient income to back your personal loan application in Singapore, you can consider getting a secured loan instead. As the name suggests, secured loans will require collateral.
This collateral assures lenders that they’ll get back their money should you default your loan. Assets such as your car, jewellery, or house can come in handy to back up your loan application.
4. Consider The Loan Repayment Schedule
Regardless of your employment status, it’s crucial to consider the loan repayment schedule when taking up a loan. If you cannot make punctual repayments, it can affect your credit score and record negatively. A lower credit score will decrease your chances of getting a loan in future.
In general, both banks and licensed moneylenders offer personal loans in Singapore. However, banks tend to have rigid repayment schedules such as monthly repayments. This may not be a suitable option for you if you’re unemployed or don’t have a fixed monthly income.
They also tend to take a longer time to process loans, ranging from a few days to a few weeks. This may not be a suitable option if you need cash urgently.
For a faster approval and more flexible repayment schedule, you can consider borrowing from licensed moneylenders in Singapore. Unlike loan sharks, licensed moneylenders adhere strictly to the rules set by the Ministry of Law.
The key is to secure a repayment plan that suits your needs, allowing you to pay on time. Not only does making punctual payments help improve your credit score, it also signals to other financial institutions that you are a reliable and sincere borrower.
5. Shop Around To Get A Suitable Loan
When you’re unemployed, it’s natural to feel stressed, especially when you have many financial obligations to fulfil.
While it can get tough, it’s important that you stay calm. Don’t rush into getting a loan which does not suit you. A licensed moneylender typically has unique loan packages, loan rates, and loan tenure that are tailored to suit your needs.
The second thing you can do after collecting information is to compare the various loans provided. Compare their interest rates, fees, and repayment schedule.
Choose the lender that you feel the most comfortable with. Remember that getting a personal loan also means that you’re signing a loan contract with the lender. You’ll need to ensure that you can fulfil the contract and make your repayments on time.
What Documents Do I Need To Apply For A Personal Loan?
In general, you’ll need to get these documents ready to apply for a personal loan in Singapore:
- Proof of identity, such as your NRIC
- Proof of address, such as your utility bills
- Proof of income, if any; this can include payslips for part-time, contract, and freelance employment