Nothing in life can always be predictable. Sometimes, just when we think everything is all planned out, little surprises tend to come our way. There are instances when there is a need for extra money to cover these emergency expenses. This can be very stressful if there is no easy access for such. Thus, the search for fast cash or a personal loan in Singapore can be a tedious and difficult ordeal.
Although we have our families and friends to go to for support, it is not everyday that they have available cash that we can borrow. Also, they have their own personal financial concerns that they may be going through. And, the last thing we want is to hassle them with our urgent expenses. So, instead of going to them for help, it is best to look for another option to get the extra money that will cover our needs.
How a Personal Loan Can Help
Fortunately, there is a way out of a tough financial woe. You can always consider taking out a personal loan when you find yourself worried about having to pay that bill that urgently needs to be settled. This type of loan should suffice for a small amount of money that will cover your concerns. Whether it is hospital expenses, credit card bills, car repairs, and rental payments. Some people also use this type of loan to add to their renovation expenses in case their renovation loan has run out.
In Singapore, getting a personal loan from a money lender in Singapore is becoming more and more popular, particularly in the last few years. This gives Singaporeans access to fast money that they need for their immediate concerns when they have no other means of obtaining extra cash.
Because of the fast and efficient process that comes with taking out a personal loan in Singapore, there is no need to worry since you can expect the money to reach your bank account in a matter of days. But the question is, how exactly does a personal loan work? What are the things you need to know about this loan before you take one out for your financial concerns?
How a Personal Loan in Singapore Works?
A personal loan is a type of unsecured loan intended for your personal use. This means that when you apply for this loan, the bank or financial institution will not ask you what you intend to do with the money you are borrowing. As there are other types of loans for specific purposes such as a housing loan, car loan, or business loan, you can use a personal loan for other expenses that are not for purchasing a property. Since the loan is unsecured, there is no need for you to provide collateral before your loan is granted. This is unlike the process you go through when applying for a secured loan, which requires collateral as part of the application. Thus, you can borrow money even if you have no property to present to the financing institution.
However, there is something you need to know about unsecured loans. For the most part, this type of loan usually comes with a higher interest rate due to the increased risk that the lending company faces because of the lack of collateral. Also, the loan is short-term, so you will have to repay the loaned amount within 1 to 5 years, depending on the tenure provided to you by the bank or moneylender. But the good thing about it is you can repay your loan faster, so you can be out of debt as quickly as possible.
What to Consider When Taking a Personal Loan in Singapore?
When it comes to this type of loan, there are lots of considerations. What should you present to the bank, so you could be approved for a loan? If you are applying for a personal loan in Singapore, you will need to show evidence to the bank that your job is stable. Being employed in a company for a number of years gives you an edge since this offers evidence of your financial stability. In addition, your monthly salary can determine the amount that you are eligible to borrow. Typically, banks can offer you as much as 5 times your income if you make $5,000 or more in a month. This means that you can potentially take out about $25,000 for your personal loan.
The next thing to think about would be the fees and interest rates. Generally, there is an annual fee placed on top of your loaned amount, which may vary from $50 to as much as $90. This is added to the interest rate, so you can have an idea of how much you need to pay in total aside from the interest, principal amount, and fee. In fact, it is good that you calculate the cost of your loan payments before you take the money out, as this will help you prepare and set aside the actual amount per month to avoid putting a strain on your finances.
When is the Right Time to Take Out a Personal Loan
Perhaps you are tempted to buy an expensive gadget or appliance, or you are planning on taking a holiday at a pricey location. Are these practical reasons for you to take out a loan?
This is something you need to seriously think about since you do not want to borrow a large sum of money when you feel not ready enough to repay it afterward.
Keep in mind that the interest rates placed on top of a personal loan in Singapore can be quite high. The range is between 9 and 8 percent for banks and not more than 4% for moneylenders, which can be a bit difficult to deal with if you do not have your finances set right. The last thing you want is to regret your decision of borrowing some money because of the difficulties that come with repaying it.
This is why if you think about it further, personal loans are not quite suitable for funding entertainment or luxurious vacations.
Taking Personal Loan to Consolidate Debt
One situation that may call for a need to take out a personal loan is when you want to consolidate your debts. If you have massive debts on your credit cards, then it may be worth using a personal loan to pay these off. Just imagine how much money you can save on interest rates alone since interest rates on your credit card debts can be astronomical when you add them all up.
So, by having the right amount of money to cover these bills, you only have to think about paying off a single loan instead of multiple credit card debts. The interest rate is also lower, along with just having to deal with a single repayment schedule.
Personal Loan for Emergency Needs
Ideally, a personal loan is best for emergency needs. If you have an urgent expense that needs to be settled, then you can use your loaned amount for it. This spares you from having to dip into your bank account, which might only drain your savings. With the lower amount of money you should settle when repaying the loan, you should be able to get out of debt faster.
Taking a Personal Loan in Singapore?
Just keep in mind that interest rates and terms vary from one financial institution to another. This is why it is important that you shop around and compare the different rates offered by banks and moneylenders in Singapore.
Always choose the best deals you can get, but without compromising the quality of service offered. By doing so, you can ensure the smooth and seamless process of borrowing extra cash and repaying the money you have loaned.
As long as you pay your loan off promptly, you will avoid incurring penalties that only add to your worries and stress. Prompt payments also prevent you from getting bad credit, which can be another issue that you would not want to deal with as it limits your financing options in the future.