Finance

5 Things You Should Know About Before Taking Out a Personal Loan in Singapore

According to Finder.com, approximately 1 in 3 people had taken out a personal loan. To cover a variety of financial obligations, many borrowers applied for loans. Other reasons range from consolidating debt to paying for medical expenses. If you are thinking about borrowing a loan, here are a few things you should know about personal loans.

1. Personal Loan Application Process is Faster

As referenced above, there are many different reasons why personal instalment loans are highly recommended and sought after today. Unlike other types of loans, the approval process for a personal loan is usually much simpler and faster to process.

In other words, these loans are vastly different, especially the time taken to approve these funds. For instance, this application process can range from 1 to 6 days (i.e. average time is less than a week) to complete. This is primarily due to less stringent requirements, and access to lenders that offer personal loan applications online.

2. Purpose for Using the Money is Flexible

We advise you to assess your options for a loan, including car loans, SME working capital loans, and unsecured business term loans. The most suitable is the personal loan, since it is flexible. Here are some of the top purposes for using this type of loan. 

  •     Cover daily living expenses
  •     Help out family or friends
  •     Finance a mortgage
  •     Buy a car
  •     Fund a renovation
  •     Pay for medical expenses
  •     Pay for a wedding or engagement ring
  •     Pay for a funeral
  •     Buy a boat
  •     Other miscellaneous expenses

Once approved for a personal loan, you can use the funds for anything you need. Unlike other types of loans, the money has to be utilised. This is mainly because the funds will go directly to the individual or company. Or you may breach the contract with the lender by redirecting the money to another expense or venture.

3. Reduce Outstanding Debt – Pay Off Credit Cards with the Highest Interest Rates

Personal loans can decrease credit card debt. Identifying the account with the highest interest rate is one of the best ways to reduce credit card debt. 

On the other hand, if you find a personal loan with a much lower interest rate, you can get rid of these never-ending revolving charges completely with an instalment loan. An instalment loan is much easier to pay off, particularly if you make each monthly payment on time.

4. Consolidate Debt with Added Benefits

In addition to eliminating credit card interest, you may consider consolidating your debt. Unlike transferring credit balances to a Zero interest credit card, you will have an opportunity to transfer these balances to a personal loan instead. By taking out a personal loan, you can take advantage of the following benefits. 

  •     Extended amount of time to pay off the balances completely
  •     Lower Interest rates for personal loans
  •     Even payment amounts each month until the balance is paid off
  •     Revolving balances that keep you borrowing additional amounts

5. Helps to Ease the Struggles of Managing Your Finances

With Singapore’s core inflation hitting 4.4% in June 2022, everyone is looking for better ways to manage their finances. Sometimes, slight financial assistance is required to get your budgets back on track. For some families, this may mean borrowing a personal loan that will help ease their financial struggles. Personal loans are ideal for many different reasons, including helping to reduce the expenses paid out each month. 

Conclusion

If you are considering taking out a loan, you may want to apply for a personal loan. Even though there are several different types of loan options available in Singapore today, a personal loan has a wide range of great benefits. Some essential benefits include consolidating credit card debt, lowering interest rates on high-interest credit card accounts, flexible terms that allow you to pay for unanticipated expenses, and a faster approval process.

Radhe

Wow! I can't believe we finally got to meet in person. You probably remember me from class or an event, and that's why this profile is so interesting - it traces my journey from student-athlete at the University of California Davis into a successful entrepreneur with multiple ventures under her belt by age 25

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