4 Essential Tips to Find the Right Personal Loan

Are you applying for a personal loan for the first time? We understand how intimidating and frustrating it can be if you don’t know where to start, especially with so many types of loans out there. Fret not – these 4 essential tips will help you navigate the process.

1. Identify the exact purpose of the personal loan

When you are looking for a loan, chances are you already have a purpose in mind for it. Personal loans are unsecured loans that can be used for a wide variety of reasons. Some common types of personal loans are:

• Medical loan
• Wedding loan
• Renovation loan
• Education loan
• Business loan

Other reasons people may have for taking a loan include clearing or consolidating existing debt or preventing an insurance policy from lapsing when their finances are stretched. Personal loans can come in handy during emergencies like these.

It’s also important to remember that just because you may be eligible for a large loan amount, does not mean you should take one. Having a specific reason in mind will help you be more objective with your research and borrow only what you need and within your budget.

2. Do ample research

It is easy to find moneylenders on the internet these days, but finding a trusted and licensed moneylender can take time. Always make sure you carry out ample research and background checks on moneylenders and financial institutions and ensure that you are dealing with legal ones. All legal lenders need to be registered with the Ministry of Law – you can check the full list here to find out if the one you’re considering is on it. It also helps to get recommendations from your friends and family.

Conducting research on moneylenders will also help you learn more about their loan policies. While personal loans are generally quite flexible, financial institutions such as banks might impose stricter restrictions and application procedures. It doesn’t hurt to make multiple inquiries before you pick a loan as there are many loan options designed to help meet different financial needs. When in doubt, seek professional advice.

3. Understand the interest rate and repayment period

Every loan comes with a specific interest rate and the repayment period. While shopping around for competitive packages, keep an eye out for deals that seem too good to be true – they probably are.

Beware of moneylenders or financial institutions boasting 0% or extremely low-interest rates, as these are likely to simply resurface in the form of hidden fees. Compare the interest rates in the market and find the repayment period that best suits your financial needs. Note that licensed moneylenders in Singapore have to cap their interest rates at 4% per month, so if you are being charged more, the lender is probably illegal.

If you have the luxury of time, consider taking advantage of deals to improve your loan package. Things like fee waivers and cashback make a loan more attractive.

4. Know your credit score

Lastly, being a responsible borrower is just as important in this process. You should first know what your credit score is. Improving or maintaining a good credit score can help you find better rates and terms. If you don’t have a good credit score to start with, try to pay off as much of your existing debt as you can, such as credit card bills. Paying bills on time consistently is key to maintaining a good credit score. Never default on loans and only take what you can repay within the stipulated repayment period.

With these essential tips, you can get the right personal loan you need. Consider R2D Credit for our legal personal loans at competitive rates and an easy application process.