Why do Singaporeans take out a personal loan? Is it because of their urgent need for cash alone? Or are there other reasons behind each loan application? Perhaps you have found yourself in this situation, as well, and you have your own reasons why you decide to apply for a personal loan in Singapore. But the thing is, society seems to dictate that taking out a loan is a bad thing. It usually implies running short on cash, and that there is a possibility to only be buried in one loan after another.
But you see, getting a loan is not all the bad. In fact, there are several reasons why people choose to borrow money from licensed money lenders in Singapore instead of simply because they need extra funds. You may even use your loan as a tool to improve your life, as long as you use the money in a practical way. This is why below, we have listed down the different reasons people take out a loan, along with suggestions on how to put the additional funds into good and even profitable use.
1. Help your friends or family members who are in need
Life is always full of surprises. Just when you think things are going great, you may come across a situation that may not be too pleasant or easy to deal with. This is why there may be times when your family members and friends approach you for financial assistance. They have various reasons for asking some extra cash from you such as to pay for their medical bills or get back on their feet after losing their house due to a calamity.
If you want to do your part to help your loved ones, then one way to get the additional funds is by taking out a loan. Consider searching for a loan type such as personal loan, payday loan that allow you to make manageable and reasonable repayments. For instance, a $100 to $200 monthly payment should be reasonable enough for a loan repayment if your intention is to support your loved ones’ financial needs.
In the end, taking out a loan with cheaper interest rates and flexible repayment options can work to your advantage. It is indeed more practical than taking a lump sum out of your life savings, specifically if there is a huge possibility that your friend or family member may not be able to repay you in the future.
2. Add extra funds for your renovation expenses
If you are planning on renovating your home, then you can take out a special loan for this purpose. But at the same time, there is a chance that you may run out of the money you have allotted for home renovation. Since the limit for a renovation loan is at $50,000, there may be a possibility that you will need more in case unpredictable things occur.
Naturally, you will not want to simply leave your kitchen or any part of your home partly completed. So, a personal loan may help cover for your expenses. But always keep in mind that it is not practical to go beyond your budget for your renovations. Set a reasonable budget and stick to it as much as possible.
3. Consolidate your debts with a personal loan
Do you have a large amount of bill on various credit cards? If you are concerned about not being able to pay these off, then you may want to settle the payment once an for all by taking out a personal loan. This way, you can spare yourself from massive interest rates from multiple cards and just settle a lower interest for your personal loan with a single repayment schedule. If you want to experience the convenience of paying off your bills, you may also do bank transfers. This means that you can easily transfer for debt from one of your credit card to several others. Then again, if you do not want to go for this route, you can simply apply for a single personal loan and get all your debts paid.
4. Have a reasonable level of your funds after massive purchases
Perhaps you have saved a good amount of money for your long-awaited trip abroad. But instead of paying the bill all in one go – even if you know you are capable of doing so – you may want to go for a practical option. This may mean taking out a loan that will prevent you from having very low funds during the time you are out on a vacation. Since you are most likely not going to be working while on a break, then you do not want to go zero on funds that will also prevent you from enjoying your holiday. Also, just one major emergency can also lead to a devastating experience during your vacation such as a robbery, which can be very stressful on your part.
If you wish, you may think about taking out a personal loan for about $10,000 and simply pay off the amount in terms. You can even choose to settle your loan in a year for just a few hundred dollars monthly. By doing so, you can be sure there is still money in the back, and it is ultimately possible for you to have a great time during your holiday.
5. Avoid credit card advances with high interest rates and exorbitant fees
Perhaps you need some money right now, but then going for cash advances on your credit card can also lead to very high interest rates. This will only end up being a major pain to deal with financially, so you may think about taking out a personal loan if the interest rate is much lower. Also, you may want to factor in the service fee of 6 percent each time you withdraw a certain amount. But for personal loans, there is no such thing as an upfront fee that you need to day.
6. Settle your wedding expenses using a personal loan
Maybe all your expenses for the wedding may not be covered completely by your personal loan, but you can at least limit the cost instead of paying everything in cash or using your credit card. Supposing you want to buy a wedding ring, you can go for a practical route by getting a personal loan and just pay a 6 to 8 percent interest rate per annum. This is indeed much cheaper than a credit card interest rate of 24 percent annually. Some promotions offered for personal loans may even come with zero percent interest rate for a span of 3 to 6 months. You may also read up on: Save on Your Wedding Expenses with These Four Life Hack
7. Spare yourself from having to make insurance claims
There are instances when you may qualify for bonuses from your insurance policy if you do not file any claim for a certain period. The moratorium insurance is also another possibility, which is effective once you do not make claims for a period of 5 years. This is why taking out a personal loan may seem quite an attractive option to obtain such reward. Retaining bonuses or discounts in your insurance policy is a great idea without having to worry about being broke at the same time.
8. Settle late payments with your personal loan
There are times when you may run out of cash, yet there are bills to pay such as your utility bill or rental fee. If you are low on funds, then the best way to cover these payments is by taking out a personal loan in Singapore with licensed moneylender. This prevents you from having to borrow money from family and friends or simply skip payments and suffer from massive interest rates or other inconvenient situations that arise from not settling your bills on time.
9. Make an important, yet time-sensitive and urgent purchase
So, you have been checking out that item at the store for quite a while, yet you find yourself low on funds – just when you realized it is on sale! If you want to grab the opportunity to pay a lower fee for the item, but at the same time you do not have enough cash, then you can always use a personal loan for it. With a lower interest rate than your credit card, you will be able to purchase the item right away and not suffer any tough consequence on your finances, at the same time.
10. Get the funds you need without borrowing from loved ones
It can be quite awkward and uncomfortable to borrow money from family and friends. There is also the risk of being declined of your request in case they do not have sufficient funds to give to you. This is why you can stop stressing out and simply take out a personal loan for your immediate needs instead of approaching your loved ones for some money.