You may have come across many horror stories on personal loans and received cautionary bits of advice from your near & dear ones. However, money troubles or emergencies are unforeseen situations and if at any point in time you need to borrow money then a personal loan is the most viable option. To make you better aware of personal loans we bring to you some of the myths and facts surrounding personal loans in Singapore.
Myth number 1: Personal Loan is damaging to your financial health
Applying for a personal and then being unable to repay it off is definitely a financial disaster. However, most adults in Singapore will have a loan or two on them for example, home or car loans and even personal loans. We bust the myth that if you apply for a personal loan you will put yourself in a dangerous spot as the reality is not such.
You can very well apply for a personal loan in Singapore and plan the repayment carefully. Only if you fail to repay the personal loan it will be damaging to your financial health. For instance, failing to repay will negatively affect your credit scores. Personal loans can be useful for debt consolidation and if you have a robust and disciplined repayment plan then you will also improve your credit scores.
Myth number 2: You need to pledge assets to get approval for Personal Loan
In Singapore, the system with loans is either they have secured loans or unsecured loans. Only in the case of secured loans you need to pledge assets or have collaterals backing the loan amount. However, Personal loans in Singapore fall in the unsecured category and do not require any kind of collaterals.
This is the reason why personal loans have higher interest rates and as compared to other types of loans. But the good news is the collaterals for a personal loan is only a myth & not a fact. So, go ahead and plan your financial needs accordingly.
Myth number 3: You can’t get a Personal Loan if you don’t have a fixed salary
This is a myth that you can’t get a personal loan in Singapore if you don’t have a fixed salary. There are many ways in Singapore by which you can still avail of a personal loan irrespective of you being a freelancer, a budding entrepreneur, or a service guy.
However, if you do not have a steady income we recommend you do not take up any kind of loans. For those who want to apply for a personal loan without a steady source of income, a co-signee will be required to sign the papers and this could be someone with a good credit score history. For instance, someone from the family or even a friend.
What could happen if you fail to repay your personal Loan?
The worst that could happen to you on failing to repay your personal loan in Singapore is legal action. If banks suspect that you are not going to repay the loan, then legal remedies will be sought upon you. Additionally, failing to repay will damage your credit score. You may think that credit score is not a big deal however, negative credit score history will tarnish your financial future.
Apart from these, your job could suffer, loss of reputation could be damaging to your career. Banks could also seize funds from your bank accounts. Our suggestion, do not get worried by all these factors and aim to create a solid plan before taking up any kind of loan. Do meticulous planning and have discipline in repaying off your debt. And you are good to go!