The process of getting a loan is long and complex. We have broken down the steps of getting a credit loan in Singapore into several steps and explained each step for you to understand.
- The first step of getting a credit loan in Singapore is where the borrower decides how much cash they need and how they plan on repaying the loan. Do your calculations to achieve a monthly payment that you can comfortably afford.
- Find out the type of loan that you want to take. There is a wide variety of loan types, such as Credit card financing loans, Medical loans, and Emergency loans, among others, from which they can choose from depending on their needs.
- Check your credit score. This will give you an idea of where you stand. The better the credit score, the more likely that you will get approved for a loan, and the lower your interest rate will be.
- Consider your options. Depending on your creditworthiness, you may need a co-signer. Otherwise, you might be required to take a secured loan that requires collateral such as a house, car, or cash in a savings account in exchange for more favorable terms. In case of default payments, the lender can seize the collateral to clear the debt.
- Find a lender that offers the type of loan that you want also, shop around for one who has the best interest rates. Do not settle on the first offer you receive shop around for the best terms in the market.
- The next step is where you actually make the loan application by filling in the forms and submitting the needed documents for verification and filing. It could be paperwork or an online application. Nowadays, many lenders prefer online applications to minimize the bulkiness of paperwork.
This step might take some time before completion. The amount of time taken depends on the borrowers’ responsiveness in submitting the necessary documents, the accuracy of the data given, and the completeness of the information collected.
- The step that follows is the underwriting process. At this stage, the lender checks the application taking several things into account like the credit and risk scores. The underwriters normally have formulas that they use to score. The process is automated.
Depending on the results of the underwriting process, the application might be approved, rejected, or sent back for more information to be added.
- If the application goes through, the credit decision is made depending on the score. If the application aligned with the requirements of the underwriting process, then you are given what you asked for. If not then, small adjustments are made like the interest rate might be adjusted and also loan amount could be reduced.
- The last thing that is done before the borrower receives the money is that the application is checked against internal and external rules to see if it complies. This stage is called quality check.
The last stage is loan funding. This is where the loan is deposited into your account.