Licenced money lenders in Singapore can give you loans when you need quick cash. But just because you applied for a loan from a money lender doesn’t mean you’ll get one.
Sometimes, loan applications get rejected and there are different reasons why.
In this article, you’ll learn why you got your moneylender loan rejected.
Reasons Why Your Loan Application Was Rejected
Here are a few reasons why your money lender loan may have been rejected:
Your Annual Income Doesn’t Meet The Requirements
As per the Moneylenders Act, licensed money lenders follow an annual income criteria benchmark to determine how much prospective borrowers can borrow for unsecured loans.
They do this to ensure that you can afford your loan repayment. If your annual income is below the minimum amount, your loan request will likely be rejected.
The table below shows the capped amounts for different levels of annual income.
|Annual Income Of Borrower||Citizens And Permanent Residents Of Singapore||Foreigners Residing In Singapore|
|Not up to $10,000||$3,000||$500|
|At least $10,000, but not up to $20,000||$3,000||$3,000|
|At least $20,000||Up to 6x of borrower’s monthly income||Up to 6x of borrower’s monthly income|
Bad Credit Score
If you have a bad credit score, there’s a good chance your loan application will be rejected by a licensed money lender.
Although your credit score doesn’t need to be great, it has to be decent at least. Licensed money lenders in Singapore cannot loan money to borrowers who have a credit score that is close to 1,000 or below. A credit score that is close to 2,000 is good.
Bad credit makes it difficult to determine if you’re reliable and trustworthy to get a loan. Hence, it’s important to maintain a good credit score so that your loan application won’t be rejected.
You are allowed to borrow more money even when you have outstanding debts with other money lenders.
However, when the ratio of your debts to your monthly income is higher than the Total Debt Servicing Ratio (TDSR) limit of 55%, money lenders reserve the right to reject your loan application.
This is done because you are seen as a risky borrower.
Money lenders in Singapore require you to appear for a face-to-face verification process to determine if you’re who you say you are.
Hence, you’ll need to show your NRIC and financial records. If there’s any mistake in your verification process, your application might be rejected.
How To Avoid Being Rejected
If you want to avoid the frustration of having your moneylender loan rejected, do the following:
Check To See That You Satisfy The Minimum Annual Wage Requirements
Before applying for a loan from a licensed money lender in Singapore, it’s important to check that you meet its annual income benchmark.
If you don’t, you’ll have to wait to increase your annual income before applying for a loan from a money lender.
Apply For The Right Type Of Loan
If you’re taking a personal loan, don’t apply for a car loan or home renovation loan. Applying for the right type of loan in your loan application can boost your chances of being accepted.
Prepare Proper Documentation
Ensure you present the right documentation when going for a money lender’s physical verification.
You can even check its website to see the kind of documentation you need to present during the verification process.
Pay Existing Debts
Endeavour to pay back your outstanding loans before applying for a new loan. If the amount you owe is too high, your loan application probably won’t be accepted.
Improve Your Credit Score
You can’t get a personal loan with bad credit in Singapore, especially not with a bank.
If your credit score is below or close to 1,000, try and improve it. When it’s close to 2,000, you can apply for a loan.
But if it’s below that number, banks in Singapore will most likely reject your loan application. Licensed money lenders look at your annual income more than your credit score, so you may have a chance with them.
If you’re not sure how to check your credit score in Singapore, you can simply apply for your credit report from the Credit Bureau in Singapore.
How To Improve Your Chances Of Getting Your Loan Approved
Before applying for a loan in Singapore, below are a few things to do to improve your chances of getting your loan application approved:
Don’t Default On Existing Loan Repayment
If you have outstanding loans, try to pay them back on time. If you default on your repayment, it will reflect on your credit history or credit score.
A bad credit history will certainly impact your chances of getting a loan.
Also, if you have outstanding loans, you should focus on repaying what you owe instead of trying to get another loan approved.
When you don’t take loans you can’t afford, you’re giving yourself a better chance of having your next loan application approved.
Don’t Take Loans You Can’t Pay Back
Sometimes, the reason people default on their loan repayment is because they chose the wrong repayment plan. Don’t just take loans recklessly.
Ensure you choose the right repayment schedule that you can keep up with.
Double-Check The Details On Your Loan Application
Before submitting your loan application, verify all the details to ensure you’re giving accurate information.
If you have mistakenly provided inaccurate information, your chances of getting your loan application approved are quite low.
How To Get A Loan With Bad Credit In Singapore
There are a few banks and credit unions that will grant loan requests to borrowers with bad credit.
However, you’d have to do a bit of research to find out which banks will accept you as a creditworthy borrower since different banks have different thresholds for creditworthiness. The good news is most licensed money lenders offer bad credit loans.
Don’t Get Your Moneylender Loan Rejected
Licenced money lenders hold all the power when you’re applying for a loan. If you do not meet their requirements, there’s a good chance they won’t grant your loan application. Hence, you may want to apply for a loan from money lenders with less stringent requirements.
If you’re looking for a licensed money lender in Singapore that gives out personal loans with easy-to-meet requirements, you won’t find a money lender that’s better than U Credit.
As a licensed money lender, we offer loans with affordable interest rates to ensure you don’t run into debt while repaying what you owe.
We have financial experts who are more capable than any personal loan calculator in Singapore. They will help you choose the best loan repayment plan for your financial situation.
Contact us now or apply for a loan today to enjoy some of the best personal loan interest rates in Singapore.