Personal Loans in Singapore
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The world as of today is plunged into a financial crisis. The costs of living are too high, and there are few sources of money out there. You never know when you might find yourself in a financial fix. This is why you need to familiarise yourself with what personal loans are and where you can find personal loans in Singapore.
What is A Personal Loan?
Personal loans can be described as a lump sum of money that is borrowed from a financial institution with an interest rate and should be paid in instalments for a set period.
The perks of a personal loan in Singapore compared to credit cards is that they give you certainty. That is, when you take a personal loan, you know precisely the amount you have borrowed, how much you are going to pay per month and for how long you are going to pay.
You can take a personal loan for a variety of reasons such as paying off high-interest debts or paying off an expensive debt immediately. This can include hospital bills and major life events. A personal loan can come in handy in many situations, and it is an easy and convenient way for you to access money.
The Difference between a Secured and Unsecured Loan?
All loans are divided into two - secured or unsecured. Secured loans are loans that are backed by an asset. This could be a car, house or any other form of property. The asset is usually considered as collateral in case you default the payment. Failure to repay the loan, the property is repossessed by the financial institution and sold to cover the loan.
On the other hand, unsecured loans require no collateral. That is, failure to repay the loan, none of your assets will be seized. Most personal loans are unsecured loans. They do not require a co-signer or collateral. But, for you to qualify for a personal loan, you must have a good credit score. The downside of an unsecured loan is that the amount may be small since there is no collateral to be seized when you fail to make payment.
Factors to Consider before Deciding Which Personal Loan is Best for You?
If you are looking for a personal loan in Singapore, you need first to determine whether a personal loan is ideal for you. Here are some factors to help you make an informed decision.
The Loan Qualifications
Different financial institutions have their own set of requirements before they can provide you with a personal loan. This includes your credit score, proof of employment and much more. You need to make sure that you meet the qualifications and have all the financial documents required.
The Interest Rate
When choosing a personal loan in Singapore, you also need to consider the interest rate. Remember, the interest rate significantly determines the amount you will pay per month and the total amount you will pay back. Unsecured loans tend to have higher interests than secured loans since the latter do have collateral.
There are some additional fees that are charged when you take out a personal loan. They include service fees, repayment fees, and insurance fees amongst others. You need to familiarise yourself with all these charges before taking out a personal loan.
The Loan Term
You should also check if the loan is to be repaid in short-term or long-term. Short-term loans are of lower risk as you have to pay your instalments within a shorter period of time thus the interest rate is lower. Long-term loans are usually borrowed over longer periods of time so the risk for long-term loans are higher. Thus, the interest rates are higher too.
Your Financial Situation
Finally, before you decide which personal loan is best for you, you need to assess your financial situation. Ask yourself, will you be able to repay the loan in time? Is taking a personal loan really a good idea? Be it a medical emergency or school fees. A personal loan can get you out of that fix. Nonetheless, make sure that you use the above information to find the personal loan that is ideal for your financial situation.