No one wants to imagine being unable to repay a personal loan, but the truth is that a lot of people default every year. COVID-19 pandemic worsened the situation in Singapore because a lot of people lost their sources of revenue as companies’ scaled-down operations or bowed out of the market. So, whether you have just changed jobs, rendered redundant, or something happened and you are in a different financial situation, the big question is, “how do you deal with the situation?”
This post offers you multiple actions that you can take when unable to repay a personal loan in Singapore and emerge a stronger person financially. Keep reading and select the best method because you can do it!
Establish why you are Not Able to Repay the Loan
There are many reasons that can compromise your ability to repay a loan in Singapore. You need to establish the cause and avoid recurrence. For example, most people find it tough to follow the terms and conditions outlined in a loan agreement because their income has shrunk. If you have recently been rendered redundant and now rely on your business for income, it might be difficult to continue with the monthly payment. Other possible causes include:
- A health condition that makes it challenging for you to work.
- Loss of employment.
- Multiple debts that make it hard to follow with their repayment.
- Growing list of expenses that take the bulk of your income.
Reach Out to the Lender and Look for a Solution
One thing you must appreciate when applying for a personal loan in Singapore is that lenders are business enterprises out to sell a service. Therefore, they lose when you are unable to repay the loan. To make some profit and stay in business, most of the banks and other licensed moneylenders will be willing to help. So, here is a demonstration of how they can come in:
- Renegotiate the Terms and Conditions: Although this might sound hard, lenders are willing to look at every situation and devise a good way out. For example, if you just lost employment, which you were using to pay S$120 every month, and you can only afford S$100, the bank is likely to take that. However, such readjustments might come with some penalties.
- Put Forward Collateral: If the amount you are paying every month is high because of the interest rate, one way of pulling it down is providing collateral. Take the example of a house. When you commit a house as collateral, the risk of the loan comes down significantly, and the lender can reconsider the interest rates. Make sure to be extra cautious with this option because you are likely to lose the collateral if you default again.
Review Your Personal Expenditure
Reviewing your expenditure can also help to address the problem at hand. This means relooking at the monthly budget to try and cut down on non-essential expenditure. For example, if you and your wife drive in different cars every morning, why not consider using one and directing the freed funds to repaying the loan. Other costs you might want to review are:
- Cost for entertainment.
- Carrying tea and food as opposed to eating in a restaurant everyday.
- Cutting down holidays, say, from three to two/one.
- Taking public transport instead of driving to work.
Consider Loan Consolidation
If there are so many high-interest debts that are eating into your income and making it hard to follow up with payments, the best way out is debt consolidation. This means that you take another loan to clear all other smaller loans so that only the consolidation loan is left. In most cases, debt consolidation helps to cut down interest rates, make repaying loans manageable, and improve the credit score.
As we have mentioned at the start of this post, you should not wait until things hit the dead bottom to think of what to do. Think broadly and prepare for the worst. In fact, you might be able to avert the crisis by looking for a loan with low-interest rates from the best lenders in Singapore. You can only achieve this by working with Lendela, a revered lender comparison site. Lendela will also be there to make the process of loan application easy, fast, and reliable.