Additional cash borrowed in time of need can come at heavy cost

When times get tough and you need additional cash for an emergency or unplanned event, personal loan offers can suddenly become your best friend

extra cash

The great thing is if you’re in need extra cash, there’s a wide array of personal loan offers to choose from in Singapore. Banks are often competing to lend to customers at lower interest rates.

Some banks have even reduced their interest rates to make their personal loan offers more attractive for customers who need additional cash.

The reason why banks make personal loan offers attractive to borrowers is because it is a great way to grow their portfolio. And with the tight regulation imposed on the offering of unsecured credit by the Monetary Authority of Singapore, banks are confident of increasing revenue with a better control on risk. Some banks are also varying their loan eligibility to meet different customer needs.

But before you rush to pick up one of the personal loan offers consider the following tips first.

1. Can you afford it?

With so many different arrays of personal loans, it becomes tempting to sign up to a loan package without thorough consideration. An important thing that a borrower should consider is whether they have the capacity to pay back their lender.

Take an honest look at your current financial situation before you sign on the dotted line. If you have outstanding debts to pay, it is not a good idea to proceed with the loan – otherwise, you will likely struggle with the repayments.An important question you should consider is, if you have sufficient income for your lifestyle after repaying your debts.

2. Compare prices

Before you take any personal loan offers you have to set aside some time to shop around and compare different packages, without simply replying on the advertised or published rates. This is because the interest rates can vary depending on a lot of factors.

A good rule of the thumb is to examine closely the total cost of the personal loan offers. Calculate the total amount repayable and add up all the upfront costs, such as processing fees. Also, don’t forget to ask the bank what other fees they collect. Think about transaction, late payment, disbursement, foreclosure or early settlement fees. These can all affect the overall cost of your borrowing.

3. Review the terms

And while you’re comparing prices, make sure you study the full terms and conditions, even before you commit to the loan, so you will know ahead what you’re getting yourself into. Read the fine print especially, because if you don’t, the tricky loan terms could cost you more than you had imagined.

4. Don’t borrow more to get less interest

Interest rates may also depend on the amount of money you’re borrowing. The higher your debt, the lesser the interest could be. With that in mind, some people opt to increase their loan amount to avail themselves of a good rate.

Chief mortgage consultant at iCompareLoan, Paul Ho, cautions against doing this even if you need additional cash. “Make sure you only borrow what you actually need,” he said. Adding: “While the interest rate may be lower, the capital amount will be higher, and so the monthly repayment is still going to be higher. Can you afford this? If not, please think again.”

5. Negotiate

To lower the cost of borrowing, try to convince your bank to give you a better rate. You should negotiate with your lender and they may be willing to cut the interest rate to secure your business, and so the loan will cost you less. If you are uncomfortable about negotiating, you should engage the services of a loan specialist.

Loan specialists will not only be able to negotiate a better rate for you, they will also be able to help you compare the best personal loan offers from among the different ones given by the many banks. It also makes sense to engage loan specialists because their services are usually free.

6. Watch out for insurance

When you take out a loan, your bank may sign you up to a credit or payment protection insurance. Check the terms of the insurance. In most cases, it is mainly to cover the loan repayments if the borrower dies, loses his job or gets permanently disabled. It does not extend any financial benefits to the borrower or his family in the event of death, redundancy or disability.

If that’s the case, you might consider taking out your own loan to protect yourself against any eventualities. Even when you need additional cash be mindful that it may not always be practical to take out an insurance if the loan amount is small and needs to be repaid within a short period.

Personal loans can go a long way towards helping you achieve your business goals. They can also be a nice safety net in case you’re forced to deal with unexpected events that may occur. While you could always borrow from friends and family, sometimes it’s a good idea to keep personal loans separate from personal relations.

To get the best 2021 personal loans, you should enquire from a variety of lenders.

The good news is there are several banks and institutions that you can choose from in Singapore to get the best 2021 personal loans. Below are the requirements you should expect, the types of loans that are available in Singapore, where you can find them, and the difference between the different lenders.

Requirements and Eligibility

Whenever you apply for a loan, the bank or institution will expect you to meet certain criteria. While each institution has its own requirements, there are a few basics that most have in
common.

Written by Ravi Chandran

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