Ravi Chandran
With the near zero Fed interest rate cut expected to have an impact on credit cards, mortgages, vehicle loans and bank savings accounts here, now may be the best time to look for best rates loan
This is because Singapore interest rates are closely correlated with those in the US. The SIBOR (Singapore interbank offered rate) for example is expected to go down. This could bring back some of the enthusiasm to the suppressed property market. The emergence of the Covid-19, which is likely to have a noticeable impact on global development, at least in the first quarter of this year. This disruption could spill over to the rest of the global economy.
The near zero Fed interest rate announcement comes after a series of Fed interest rates lowering and the best rates loans could be just a better search away.
Table of Contents
Some banks began cutting their home loan interest rates as early as April last year. DBS and UOB were among the early movers offering between 2.38 per cent and 2.48 per cent in April, from around 2.58 per cent to 2.68 per cent earlier. In mid-July, rates below 2 per cent appeared with DBS offering three-year fixed-rate home loan package with a first-year rate of 1.89 per cent as a “National Day special”.
But are even lower rates possible? If the coronavirus continues spreading, then it is a definite “yes”. The worse the COVID-19 outbreak gets, the lower mortgage rates will go. If Covid-19 becomes an epidemic in the United States, then rates on home loans are likely to fall even further.
Since the third quarter of last year, banks have lowered interest rates for both fixed and floating home loan packages by 10 – 30 basis points (bps). Some banks have already lowered their mortgage rate to 1.7 per cent, to keep pace with the decreasing interest rates.
The 3-month SIBOR has is 1.08125 per cent now. The further lowering announced by the Fed is expected to drive the interest rates for mortgage loans further down.
When shopping for best rates loan deal, never forget to have a contract with the lender. Shop around and compare where to get the best interest rates loan deal. To shop for the best loan deal may sound like an obvious statement that you may have heard many times. But have you really taken that advice to heart, or are you desperate to get a loan and willing to accept any terms just to get cash in your pocket?
Here are five things to consider when shopping for best rates loan deal.
Interest rates always matter!
Even if you have so-so credit and know that you won’t qualify for the best rates it’s important to decide if the interest rate you are being offered is worth it. Just because you think you can handle high interest payments doesn’t mean you should get locked into them. If possible, hold off on applying for a best loan deal until your credit has improved.
Fees and penalties matter when you are shopping for a best interest rates loan deal too.
For instance, there may be a fee to set up the loan or a penalty for making a late payment – or paying early. Some lenders charge fees for paying off a personal loan balance ahead of schedule. It’s important to get all the information about fees before signing up for a loan.
Also, beware loans with no credit check when shopping for the best rates loan deals.
No credit check loans always cost more than those that require a review of your credit report. No credit check loans include payday loans, which charge interest rates that can have an annual percentage rate (APR), sometime as high as 300 percent. Think long and hard before getting a fast loan from a moneylender, even if they are licensed moneylenders.
Get some free advice when shopping for best rates loan deals.
Free advice is useful to help you wade through the challenges of getting start-up financing. One of the persons you should talk to to get free advise is the independent loan specialist. It is good to understand the legal jargon in that stack of papers you will have to sign before the small business loan is disbursed.
The small business loan or even personal loan documents could be a bit overwhelming, but with the help of an independent loan specialist, you can get a full understanding of what the legalese means. In fact, many independent loan specialist encourage loan applicants to understand the loan documents before they even complete a formal application for a loan.
Are you trying to pay off debt? Loans for consolidating your bills can be be helpful when you are trying to improve your credit score and get out of debt. However, debt loans are not a good idea if you don’t have a plan to stop overspending. A debt consolidation loan should be part of a bigger plan to improve your finances, which should include budgeting and saving.
Some loans require collateral. This means you are agreeing to hand over some type of personal property if you end up defaulting on a loan. Some items that are used as collateral for loans include homes, cars, boats and jewelry.
All loans should have a contract
Even if you borrow money from a friend or relative it’s important to get the terms and conditions clearly understood before any cash changes hands. Use a written contract so that there are no misunderstandings about interest rates, collateral, number of months to repay, or any other terms.
The Bank of Mom and Dad may seem to be the best place to go to for the cash you need, especially if you need it in a hurry. But borrowing from relatives (even close ones) or friends can be a very quick way to put a hitch in an otherwise solid relationship.
So, when you borrow money from your nearest and dearest, do it with paperwork, a payment schedule and a plan to follow if and when you can’t make a payment. Interest is optional. Your lenders can charge it if they chose to, but many do not.
Mr Paul Ho, chief mortgage officer at iCompareLoan, said, “when searching for the best rates loan deals, remember that if Sibor drop, banks increase the spread. For example when Sibor was 1.5%, Sibor + 0.2% was available, and when Sibor was 1%, banks will raise the spread – it becomes Sibor + 0.35%, etc, as it is now.”
