Life is indeed more exciting because of surprises that come our way. Sometimes, we assume that we have everything all planned out, only to encounter some situations we are not expecting at all. But at the same time, these things allow us to grow and become stronger, which is what life is all about.
But then, some surprises are not quite as pleasant as the others. This is particularly true with financial problems, which can increase our stress level. The knowledge that we do not have enough puts us in a situation filled with anxiety since the last thing we want to happen is to encounter more problems when we are not able to meet our financial obligations. Yet, the fact remains that there are instances when you may experience being short of money. There may be a specific amount required for you to pay off an immediate expense, but you do not have it at the moment. What’s more, you need to have this amount within a short period, and you may have already exhausted all your efforts to find extra cash, but to no avail.
Singapore offers a number of options for individuals who find themselves struggling to obtain extra cash for their pressing needs. This may be in the form of a personal loan, temporary credit line through a credit card, and quick loans from licensed moneylenders in Singapore. No matter what options you choose to take, it makes sense to weigh your options to be sure you have come up with the best choice that is suitable to your situation.
But if you have made a decision to apply for a personal loan, some things need to be taken into consideration to avoid putting yourself in deep waters. Below are among the things you should think about before you decide to take out a personal loan from a bank or a moneylender in Singapore.
1. Fees and Extra Charges
You have probably heard of lenders who offer a personal loan with a “0 percent interest rate”. If you are in dire need of extra funds, this may seem like an attractive offer that you would never want to pass up. After all, who does not want a zero percent interest rate on their loan, right? But did you ever ask yourself “what’s the catch”?
Yes, there is a catch, and you better be aware of it before you make a quick decision of biting the bait. A personal loan may come with such an impressive feature, yet the fact remains that banks and lending institutions are businesses, too. Thus, they can never possibly operate by just offering a product that will not give them anything in return. So, there is probably no high interest rate to worry about. Yet, there must be additional charges that are added to the principal amount when the time comes for you to repay the loan. Now, that makes all the difference, right?
Generally, there is such a things as a processing fee that is deducted from your loan once it is approved. The amount may range from 2 up to 3 percent of your loaned amount. Then, other fees may be included such as late payment fees, change of tenor fees, and cancellation fees. There is also such a thing as an early redemption fee that will cost you some money, too.
2. Interest Rates
Not all banks and money lenders are created equal. There are financial institutions that offer lower interest rates while others hike up their fees, which makes it tougher for you to repay the loan. In this case, it is best to shop around to find out which lender or bank offers the most competitive rates that match your budget.
When you compare interest rates offered by one lender to another, it is best to consider the Effective Interest Rate. Take into account the compounding periods, as well as the application fees, so you can have a better idea of what you might end up paying for your loan. Then, there is the annual flat rate that will also impact your loan repayment. This way, you will be able to determine the amount that must be paid every month, so you can set your budget well and not find yourself in more surprises with your finances.
The main idea behind taking out a personal loan is considering your ability to repay the loan. If you are successful enough to be granted a loan, yet you are not able to repay it, what is the point? Do your best to not place yourself in deep water when the time comes for you to make loan payments. Check your financial situation and the amount you are comfortable enough to pay each month without putting more strain on your finances.
3. Credit Rating
Getting a personal loan is not that hard, as long as you are eligible for it. In fact, if you apply for a loan from a money lender, you can receive a response from them within 24 hours or two days, on a maximum. So, this makes it easier for people to get the money they need whenever the necessity is quite urgent.
Yet, you have to be aware of the fact that your credit rating is taken into account when you apply for a loan. Unless you have a favorable credit rating, you may experience difficulties with taking out a loan from a bank. But if you choose a licensed moneylender, the whole process may be a little easier even with a poor credit. At the same time, you should be aware of the interest that must be paid instead of settling for an option with a much faster and less stringent loan approval process.
At the end of the day, the goal is to improve your credit rating, particularly once you are approved of a loan. This way, you can eliminate further stress on yourself from having more debts. The goal is to be eventually debt-free and not collect more and more loans with greater problems when it comes to repaying each. You may also read up on: (How to Get a Personal Loan in Singapore With a Bad Credit Score)
4. Take Out a Loan for a Specific Purpose
Aside from a personal loan, there are other types of loans that you can apply for depending on your purpose. There is a payday loan, study loan, business loan and car loan, all for a unique purpose, with applicable rates. If you are in need of money to pay for your tuition fee, then you should consider taking out a study loan instead of a personal loan. The same is true when you are require extra funds to buy a car, which in this case a car loan is best to take. With a specific loan for the purpose you have in mind, you can get better interest rates and terms that will suit your budget more.
5. Life Span of the Loan
Singapore banks require borrowers to take a 12-month tenure for their personal loan on a minimum. This amount may be paid off in a total of 6 months with loan payments of at least $10,000. With this term, the lender can get the interest fee incurred from the loan. The most important thing is that you pay your loan on time, so that you will no longer have to suffer the risk of paying a pre-payment fee.
At the same time, there are varied terms and duration for a loan. The practical thing for you to do is to decide on the best option that matches your needs to avoid any exorbitant fees that will only add to your financial concern. Shopping around and comparing the different interest rates and terms that are offered by each lender or bank can also help you make the right choice when you need additional funds for your particular needs. Use these pointers to further assist you with making a choice when it comes to taking out a loan without putting further strain to your budget.