on May 15, 2021
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. With so many types of loans out there, are you racking your brains to find the right kind of loan to suit your needs? Fret not- these 4 essential tips will help you navigate the process.
Why do you need a personal loan?
When you are looking for a loan, chances are you already have a reason why you need one. Personal loans are unsecured loans that can be used for a wide variety of reasons. Some common personal loans are:
Other reasons people take out loans include clearing or consolidating existing debt or preventing an insurance policy from lapsing on certain months when their finances are tight. Personal loans can come in handy during emergencies like these.
Just because you are eligible for a huge loan does not mean you should take it on. Having an emergency or specific personal loan in mind will help you be more objective with your research and borrow only what you need and within your budget.
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 licensed moneylenders. It also helps to get recommendations from your friends and family.
Researching the money lenders would help you find out more about their specific loan restrictions and how they’re to be used. 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 and checks before you pick a loan as there are many loan options designed to help meet different financial needs. When in doubt, reach out to loan experts to find out more.
Interest rates and the repayment period
Every loan comes with its own interest rates and the repayment period. While shopping around for competitive packages, keep an eye out for deals that seem too good to be true. The old adage, “if it sounds too good to be true, it probably is” is certainly true when it comes to financial matters and you can never be too careful.
Beware of moneylenders or financial institutions boasting 0% or extremely low-interest rates as these could resurface in the form of hidden fees. Compare the interest rates in the market and find the best repayment period that suits your financial needs. Licensed moneylenders in Singapore have to cap their interest rates at 4% and below a month so you can consider borrowing from moneylenders that offer the best rates for you.
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.
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 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 out what you can repay within the stipulated repayment period.