You can access quick personal loans in Singapore from Licensed Moneylenders but this doesn’t mean you can get away with it. Any borrowing, whether from a bank or moneylender, requires a lot of discipline. You should ensure you pay your debt on time. If you find that you are unable to pay moneylenders on time, here is what might happen, and what you can do.
Consequences of Default
Repossession
This only applies to secured loans where the loan is backed by a security. You risk losing your property if you default on a secured loan. The lender repossesses the property upon default and has a right to sell the property to recover the outstanding loan amount. The most commonly USED securities include but are not limited to; House, Motor Vehicles, Machinery, CDs, Bank Accounts, etc
Interest Keeps on Accrual
One thing that happens when you default on a loan is that interest keeps accruing. You are left to pay interest on top of interest. Moreover, lenders may start charging late repayment fees on the amount defaulted. The law allows them to charge a 4% late repayment fee per month on the amount due.
Legal Action
You may face legal action if you fail to settle the loan after the lender has provided you with a notice to pay. Always remember you signed a contract that is legally binding and an action can be taken against you in breach of contract.
Future Loan Decline
Since your credit score is affected by default or late repayment, it can paint you a bad picture of your potential future lenders. Any time you approach a lending institution for a loan facility, your default history will always be a reference point for the decline. Banks and other lending institutions may classify you as un-creditworthy because of your bad credit history
Loan Tenure Extension
If you do not pay your loan on time, this can initiate the lender to restructure your loan so that you can be left with a manageable installment. Loan restructuring is whereby the lender amends the loan term mostly on the loan tenure into a longer period thus spreading your loan into more manageable monthly instalments. Loan restructuring prolongs the loan repayment period making you pay more interest over time.
Poor Credit Score
All loans whether good or bad are rated by credit bureaus. When you pay your loans promptly, you build on a positive credit rating. On the other hand, if you default on your loan payments, you leave a negative mark on your credit history. Having a bad credit score on your credit report is undoubtedly undesirable. With a negative rating, you risk having your loans declined by lending institutions.
Bottom Line
Before applying for a personal loan in Singapore, it is important to consider how you are going to pay the loan installments and be sure you can do so on time.
If you are not able to meet your monthly installments, the best thing is to talk to your lender and chat the way forward.
Finally, make sure to keep up with your repayment schedule
