Applying for a personal loan is not like heading to a supermarket and picking several products. You don’t just take a personal loan from the first lender you encounter. You need to do your homework as there are many unscrupulous lenders out there. However, this is not the only thing you should be worried about when going for a personal loan in Singapore. We have taken the liberty of listing 3 very important things that you should take into consideration before you append your signature on that dotted line.
This is a no-brainer, right? Unfortunately, most Singaporeans, in an attempt to get approved for a personal loan, rarely give enough thought to the interest rates. This is catastrophic! The thing is, because a personal loan is unsecured, you are not required to provide collateral as would be the case with say a renovation loan or logbook loan.
Lenders tend to set the interest rates based on how credit-worthy you are. If you are deemed to have a high risk of default, the interest rates will be extremely high. In simple terms, a poor credit score attracts high-interest rates. Your goal should be to go for personal loan lenders in Singapore that offer reasonable interest rates even if you have a somewhat poor credit score.
What do you intend to use the personal loan for? The thing is, there are no restrictions to how you can utilize personal loans in Singapore. If you are not careful, you might find yourself embezzling the loan money in ways that are not productive.
Most of the time, you take a loan because you want to meet a certain need be it buying an asset, renovation, medical emergency, and whatnot. But since there are no restrictions to how you can use personal loans, you might find yourself going on binge drinking, going for an unnecessary vacation, or simply buying jewelry that you don’t need.
You need to avoid using the loan for purposes that are not productive because, at the end of the day, you will have to repay your loan together with interest. Use your loan in the most productive way such as meeting financial emergencies, clearing high-interest credit card debts, or buying an asset.
Fees and Charges
Now that you know the interest rates charged on a loan you intend to take, it’s also fundamental that you familiarize yourself with the fees and charges associated with the personal loan in Singapore you intend to take. The common fees and charges are late payment charges, early payment fees, and annual fees.
Late payment charges as the name insinuates, refer to an additional fee you are slapped with for making payments beyond the agreed date. It is a penalty of sorts that is meant to ensure you pay your installments on time.
Early payment fees are a penalty for clearing your loan earlier than the agreed time. Yes, clearing your loan early is a good thing. However, your lender had an expected income or profits from repayment of your loan on the agreed period. As such, clearing the loan early might mean a loss of profits which the lender recoups by slapping you with a fee.
Annual fees are an amount that is paid yearly on top of the interest rates. This means that if your loan period is 4 years, you will pay this fee 4 times.
You now know the 3 most crucial things to consider before taking a personal loan in Singapore. How should you go about applying for a loan? To avoid the cumbersome process of reading lots of information on comparison sites which is not only tedious and time-consuming, you need to let Lendela do all the hard work for you.
Yes, lendela does all the hard work for you and pairs you with the best lenders for the type of loan you apply based on the information you provide. You visit the Lendela website, make an application from the comfort of your home, receive offers from various lenders, choose one which best appeals to you, Lendela books an appointment for you, you get to read the loan agreement, sign the agreement, and money is deposited in your account! See? It’s hassle-free and convenient courtesy of Lendela!