Should You Take That Personal Loan?

Should You Take That Personal Loan?

When it comes to handling finances, everybody eventually needs help. In the last decade or so, personal loans have become very popular in Singapore.

However, even with all of the money saving tips and money handling tips that can get found online, personal loans are still very much active in financial handling.

What Is A Personal Loan?

A personal loan is an unsecured loan. It is the kind of loan you apply for when your main purpose is for use for one’s purposes like traveling, schooling, or shopping. The bank usually does not ask for any explanations of why the person would need a personal loan. If you have bad credit, you may want to approach a legal moneylender. Visit www.filife.com to apply for a loan with licensed money lender.

What Are The Characteristics Of A Personal Loan?

The following characterizes a personal loan:
● It is unsecured, which means that the bank does not ask for any property upfront to act as collateral of the borrower.
● The interest rates of personal loans are usually higher than those on secured loans since the banks are taking more risks with it.
● Interest rates are short term. They typically become due and demandable between 1 to 5 years.

How Does One Qualify For A Personal Loan?

To qualify for a personal loan, a bank only need to determine the limitation of the individual’s personal credit. This means that the person’s monthly income gets multiplied to a certain number, which is usually the number five. If your monthly income is S$1,000, you are eligible to borrow up to S$5,000.

What Are The Disadvantages of Taking Personal Loan?

Taking a personal loan has the following disadvantages:
● Banks usually charge an annual fee during the duration of the loan. This amount can be as low as S$50 a year.
● Personal loans have an interest rate between 9% to 18%, so borrowers usually pay so much more for their travels or for that piece of dress that they bought for the personal loan.

When Should You Consider Taking a Personal Loan?

Since personal loans have less stringent requirements, and every person with an income can easily get five times his monthly salary, it is tempting to apply for it. However, not everybody should ask for it.

If you are looking for some good scenarios where taking a personal loan would not be a bad thing, the following should provide answers.

● When choosing a personal loan could help you out with debt consolidation. Debt consolidation is just the process of merging outstanding loans and making them payable in one secure installment scheme. This usually comes at a lower interest rate and gives more advantage to the borrower.
● Credit card debt payment is another good reason. If you have a significant credit card debt, you can cover it and get rid of those high-interest rates through a personal loan.
● When you are planning on venturing in a new small business, a personal loan could help add to your capital.

If you can control yourself with your personal loan and make use of it for your advantage rather than merely purchasing items that depreciate in time, then a personal loan is right for you. Make sure that you contact Singapore banks or money lender directory to compare and contrast their loan rates!

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