Tips on Managing Credit Effectively

21 February, 2012

One of the most common question people ask moneylenders when borrowing money is how much these credit facilities can grant for personal loans in Singapore.  If this is the first question that pops to your mind then you probably need to take a closer look at your cashflow and affordability to service the intended loan.

According to the Singapore’s Moneylenders’ Act, a borrower may borrow up to 4x their monthly salary if their annual income exceeds $30,000 per annum. However, one must first ask themself if such amount is actually required.

Many may not know moneylenders are strictly short term solutions that do not come cheap. As such, when one is considering taking a loan with a moneylender, the flow of hierarchy should be to first seek solution amongst family members, peers then banks.  Where all else is exhausted, then only should you borrow the difference from a moneylender to minimise the cost of your liabilities.

It is a computed statistics that many of today’s generation is over-borrowing to an extent where new loans are taken to service existing loans. This is an unhealthy practice, bearing in mind that each time a new facility is taken, a fraction of your income would be shaved off.  So it is always wise to plan your cashflow carefully before taking up a loan as well as weighing the difference between a need and a want.  Hence, the 1 question that should pop to your mind is, when is enough, enough.

Zhiqiang & Tingyi