4 Important Factors On Long Term Loans in Singapore

Whether you’re in need of urgent cash to make a big purchase or to pay for hefty business expenses, a long term loan is often just the thing needed to give you that extra time to pay back the amount you borrowed.

But what exactly is a long-term loan?

Just like any other term loan, the borrower is given access to a lump sum which is then repaid with interest over an agreed upon period of time. The key difference with long term loans is undoubtedly the repayment period—which goes from 3 years to 10 or even 20, for commercial real estate purchases.

As compared to short-term and medium-term loans, long term loans come with lower interest rates and smaller monthly repayments. Other than banks and other traditional financial institution lenders, this type of loan is also offered through alternative moneylenders.

What can it be used for?

If you’re taking out a long term personal loan, it’ll likely be for large purchases such as a vehicle, boat, a lavish wedding or an emergency that requires a complicated and costly surgery. Though this may be good for short-term finances, since it may be easier for one’s cash flow—it also means that you’ll stay in debt for longer.

With that said, a long term loan in Singapore is more often than not taken out by business owners. It’s usually used on things like repairing and replacing worn-out or broken-down equipment, as well as purchasing commercial real estate. Otherwise, it goes into investment towards activities that could positively affect the long-term growth of the business and require funding over an extended period of time. This includes business acquisitions, the opening of additional branches, product line expansion, large-scale renovation or new equipment purchases.

Application process

Though the application process may vary depending on where you end up going, the basic eligibility criteria is that one must be a Singaporean resident over the age of 21. Expect to have to provide details about your employment as well as your current earnings. If you have sufficient collateral, a good credit score and are prepared to take on this long term financial burden of having a sizeable amount of revenue going into repayment each month—you’ll have to provide some supporting documents as proof of that.

Additional advice:

1. Borrowers with bad credit scores may have difficulty in getting loans approved by banks and other financial institutions. In this scenario, turn to alternative lenders instead. However, beware that interest rates may be higher the lower your credit score—hence the need to improve your credit score before trying to take out a loan. Some ways you can do so is by paying off your debt, being timely with bill payments and keeping a close watch on your credit report for errors.
2. Compare loans. Shop around for the lowest rates and best terms suited for your needs. Taking out such a huge loan warrants extreme caution, so it’s crucial to evaluate the options you have before making your decision. Some moneylenders with the most reasonable rates include Orange Credit and Capital Funds Investments.
3. Depending on the lender, getting approval for the loan could take months, so if you need funding immediately, this may not be your ideal choice. It’s best to go into this expecting to have to fill up plenty of paperwork and wait it out.