Financial troubles do not ring a bell before it knocks on your door. At some or the other point in life, most of us may face money troubles no matter how careful we are. The immediate reaction to such situations is that people turn to take up a personal loan. To tide through the situation taking up a loan meets the urgent requirement. There are many things you need about personal loans. So, read this blog to know all about personal loans in Singapore and how it can help you!
What are Personal Loans?
Personal Loans are loans offered by banks which defines a small sum of money that you are granted by the bank. This is granted without the requirement of asset documents like a car or house etc. Personal loans are unsecured loans and probably the quickest way to get access to a sum of money. You may be wondering what is an unsecured loan? We got all information to make simplify things for you.
A secured loan is an amount of mount granted to you by financial institutions basis the asset you pledge like a home or a car, etc. For instance, car loans or mortgages. On the other hand, an unsecured loan does not require you to pledge any asset. Also, personal loans have extremely high-interest rates. So, personal loans are an example of unsecured loans.
Types of Personal Loans
There are various types of loans that can technically be considered personal loans in Singapore.
Personal term Loan
This refers to any sum you loan from banks and pay it back every month as an instalment along with the interest. You can repay the loan amount within a specific period of time ranging from one to seven years.
Line of Credit
Also known as a revolving loan, credit line, and flexible repayment loan, this type of loan allows you to have a pre-approved loan from the bank. In this type of loan, you can withdraw the money as and when you need it and repay the loan as and when you want to. But there’s a catch, the more you stretch the repayment of loans, the more interest you will have to pay. The interest rates on such types of loans are usually very high.
This type of loan is usually taken up to manage debts on credit cards. This allows you to move your existing credit card debt to a new credit card issuer. It is also known as A balance transfer is a kind of loan which is used to manage credit card debt. It is also known as a short-term funds transfer facility. This type of loan will allow you a 0% interest rate on your new credit for a specific period. A balance transfer is best when you are doubly sure that you can repay your debt within the 0% interest period.
Debt consolidation Loan
The debt consolidation loan is for those who are heavy on debts and owe money to multiple banks. In such a scenario you can opt for a debt consolidation loan. The bank will repay to all the banks on your behalf & you have to pay off the debt to just one bank. This automatically means you don’t have to worry about multiple fees and interest rates instead it will control your expenditure. Therefore, you can focus on repaying your debt to just one bank. This type of loan allows credit card debts and personal loans.
When to take up a personal loan in Singapore?
The most important thing to do is decide when and why you need a personal loan. Take carefully measured decisions and consider the interest rates, processing fees, and other miscellaneous charges that may come along with it. Many a time people get carried away by borrowing money to spend lavishly on a vacation or a wedding. However, these can be the worst mistakes you can make. Personal loans are the solutions for emergency financial crunch. You can take up a personal loan in case of a medical emergency, credit card debts, educational debts, family emergencies, etc.
Factors to Consider When Choosing a Personal Loan
It is absolutely vital to do thorough research before taking up a personal loan and committing to repaying it. Some factors you should consider before taking up a personal loan in Singapore are interest rate, repayment period, the maximum loan amount you can get, minimum loan amount, processing fees, and other hidden costs if any.
To get a personal loan in Singapore the most important thing you will need is good credit history. A steady and secured income comes second but most importantly look into the fact as to why you need a personal loan. The reason for taking up a personal loan should be a ‘need’ and never a want’.