The credit system represents the relationship between a natural or legal person who offers the loan and the person who receives it. Furthermore, the credit system in Singapore is defined by credits provided by banks and non-banking institutions to private or legal persons. If you are an entrepreneur looking for financing in order to start up your business, you can appeal to debt financing. Debt financing basically means that you borrow capital and agree to return it within a certain amount of time. Our accountants in Singapore can offer guidance on thecredit system for entrepreneurs in this country.
Table of Contents
Parties involved in a credit in Singapore
The person who provides the loan is referred to as the lender and the one who benefits from the loan is the debtor. The loan generally represents an amount of money that has to be returned before a certain date, along with a certain interest. The interest is defined as the gain requested by the lender from the debtor. The lender is privileged with the right to claim against the debtor, being able to demand the return of the loan and interest as agreed between the two parties. The debtor has the obligation to return the loan and the additional interest within the time frame specified in the loan contract. An accountant in Singapore can provide more details on this matter.
Types of loans in Singapore
The credit system in Singapore enables different types of loans that can be made. These are:
• Commercial loans: these are debt financing loans. Most banks and financing organizations in Singapore offer loans for the jump-start of small businesses.
• Personal loans: these are unsecured loans which can be utilized for virtually anything. Personal loans can be:
o Term loans: it is provided with a fixed time frame and fixed monthly installment payments;
o Revolving loans or personal lines of credit: it offers a credit limit which can be used anytime, and a minimum monthly payment of 2.5% or SGD 50.00, depending on the one which is higher. With such a loan, the person who benefits from it can utilize his or her credit after he repays the owed amount of money.
• Home loans: they allow the debtor to borrow money to acquire a residence.
• Renovation loans: these are utilized to renovate or repair a residence. Generally, the loan amount can vary between SGD 10,000 to SGD 30,000.
• Car loans: are used to buy new or pre-owned car. The biggest amount of money which can be loaned for this type of loan is of 60% of the purchase price for cars that are valued less than SGD 20,000.
• Education loans: they can be utilized by students to pay for tuition fees, books and even expenses of living. This type of loan has more flexible repayment methods and smaller interest rates.
For further information on the credit system in Singapore, the types of loans available in this country and the eligibility process, we invite you to get in touch with our accounting firm in Singapore.