5 Things to Consider Before Taking a Personal Loan in Singapore

Are you planning on taking a personal loan in Singapore? Or do you know of a person who does? Well, like so many other people, you may be a bit confused about the whole process. Where do you start? Who is the best money lender? How do you find the best rate in the market? These are probably some of the questions you are seeking answers to. Taking a personal loan comes with its fair share of challenges. In fact, the difficulties seem to be rising as the days go by. In order to enjoy maximum benefit from the loan, it is important to think of the following aspects prior to acquiring the loan:

1. What Is Your Need?

Many people get quite excited simply thinking of what they would buy with the amount advanced by a money lender or financial institution. May be it is new furniture or car. Probably you want to payoff other loans that charge a much higher interest rate. Or you plan to purchase some property. However, some will simply want to spend money on basic luxuries such as a cruise, jewellery, or a trip abroad. Before even perusing through the application form, it is critical to make certain the personal loan is really necessary .The last thing you want is digging deeper into your pockets incurring more debt.

2. What Is Your Monthly Income?

Before taking the bold step of looking for a personal loan, an individual needs to know his annual income. The amount of salary you receive on a yearly basis will determine the amount you qualify for. The general rule is that people earning at least 30,000 annually can qualify for up to 4 times their annual income. People who earn less than 20,000 will qualify for less. Individuals with an annual income of more than 100,000 can even negotiate for more than 4 times their income. Preference is given for Singaporean citizens who have permanent employment and have been working for a long time.

3. Do You Plan To Use Collateral?

Are you planning to use collateral or not? Generally, personal loan in Singapore fall into two main categories: secure and non-secure. In order to acquire a secure personal loan, a borrower needs to provide some form of security. This can be a car title, property title or any other. Non-secure loans don’t need any kind of security. They are mainly based on a person’s credit worthiness and ability to pay. Since they are not secured, non-secure loans charge a higher rate of interest. The terms and conditions for acquiring the loans is more stringent compared to secure loans.

4. What Rate of Interest is being charged?

One of the main factors that will determine the suitability of a personal loan is the rate of interest charged. In fact, many people first pay attention to the interest rate. Their desire is to acquire a loan that charges a low interest rate as this will greatly reduce the amount of money you end up paying when servicing the loan. To get the best rate, it is vital to compare the interest offered by various financial institutions as well as other money lenders. Online loan calculators also help in determining the most competitive rate in the market.

5. How Flexible Are The Terms?

Getting a personal loan is one thing and servicing it is another. Although the intention is to repay the loan within the shortest time, and also to stick to the agreement, circumstances may change along the way. For instance, you may lose your job, an emergency may arise, or there may be slump in the economy. A good personal loan should come with options that allow the borrower renegotiate the loan terms. This may entail extending the repayment period, lowering the rate of interest, and also increasing the amount borrowed.

Personal loans come in quite handy in many situations. As matter of fact, many people have been able to invest or develop themselves due to the personal loans. Many have taken higher education, purchased property, settled pending bills and more. Nonetheless, a borrower should always ensure the loan is put to good use. Failure of which may lead to more harm-than-good. These include; widening debt, stress and depression, lowered standards of living, and more. By considering the factors mentioned above, a prospective borrower will not only identify the right personal loan in Singapore, but also have peace-of-mind.

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