Do you intend to take an education loan Singapore so that you can do your studies with a peace of mind for the next few years? There are a few points of consideration to note before you decide whether the education loan is suitable for you or not.
Normally, prospective students wanting to enter a university after getting their diploma or 'A' Level results, or after national service, would go for the loans from the government. They are the CPF Education Scheme and the MOE Tuition Loan.
Read more about study loans by government - https://www.moe.gov.sg/financial-matters/government-loan-schemes/study-loan
However, not all qualify for these schemes.
Besides the government schemes of study loans, there are 2 main avenues of taking a loan for studying in Singapore. They are either a bank loan or a loan from licensed moneylenders for education. Let us explain how the 2 different loan types work:
If you wish to obtain a loan from the bank, assuming the principal loan amount is $20,000, you will be paying an average of 4.5% interest rate per annum for over 5 years. In Singapore, numerous banks do offer study loans, with DBS and OCBC as the more popular choices among them.
You are required to be at least 21 to obtain on your own. Should you fall below that age, you need a parent, guardian or other guarantor to help you sponsor.
There are factors to consider when taking a bank loan for studying - the loan tenure, interest rate, repayment terms, late payment penalty and other fees. The bank loans for studying take its guidelines from the Ministry of Law and Monetary Authority of Singapore, which are governing bodies in Singapore.
Licensed moneylenders do disburse loans for studying purposes on a regular basis too. Usually, you are able to get better terms than those from banks. They are best suited for providing study loans as the application processes are usually faster and more immediate than the banks.
To borrow from the licensed moneylenders, your guarantor must have an adequate income. There are 2 types of repayment for study loans - monthly repayment and interest only loans.
Taking studying loans in Singapore can be met with a range of challenges should your destined path does not go as planned.
In some unfortunate events, you may be unable to repay the study loans to the banks or licensed moneylenders. Unfortunately, your guarantor has to face the music as the financial institution is likely going to chase after the guarantor to repay the study loans. They will try to collect the money back from them.
If the repayments are not materialised after that, legal actions can ensue. The study loans are unsecured loans. They will not make you suffer losses of any collateral to the bank if it is a loan from the bank.
Even for licensed moneylenders, study loans for education are precious and it is advisable to utilise the loans wisely to ensure that the student gets to happily graduate out of the course after the entire study term ends. The student must also try to get a happy good job after graduation to justify the study loan in Singapore.