In this article, we will talk about loans in Singapore.
A Personal loan is very common these days as people take this loan because it is available at a cheaper rate than other loan and has a low rate of interest also than the other loans.
There is also a businessman who take this type of loan, and that is called SME loan Singapore. SME means Small and Medium enterprise loan, which is usually taken by a small businessman to pay for his expenses before and after setting up his business.
These are the advantages of taking a personal loan:
- They are flexible: A personal loan is not like other loans because other loans are taken up for a specific reason.
This loan is taken up by a person and can be used by him in any way he wants to, and no one can interrupt him or her.
This loan can be used to pay for medical bills, car purchase, vacation charges etc.
- Low-interest rate: This loan has a low-interest rate compared to other types of loan because this loan is taken for a short period of time with a small amount.
Whereas other loans are taken for a longer period of time and amount is also high compared to a personal loan.
- No asset is kept as collateral: This type of loan is not the other in which you have to keep something as collateral like your house or your car.
This is so because this loan is taken and paid back immediately after some time and is for a small amount while other loans are for a big amount, so something has to be kept as an assurance.
- There are many lenders: You can take this type of loan from banks or credit card union, or you can take it from an online lender.
- An excellent credit score is not required: In this type of loan, you don’t need a goof or perfect credit score as you or anyone can just take the loan from a bank or institution.
Some lenders will try to fool you by saying a lower rate of interest, and while it’s time to pay, they will ask for an amount which is more than the principal amount.
- The monthly payment is the same: The amount which you pay in 1 month is the same again, and again in every month, there is no change in it.
- You can take the amount you want: There is no limit on the amount taken you can choose how much amount you want to take and also select a specific time period.
- Approval is quick: This loan does not require much time to approve as you don’t have to keep anything collateral and don’t need a good credit score.
So whoever is giving the loan will hand over the amount almost instantly.
What are the disadvantages of taking a personal loan?
Whenever you take a personal loan, then you should be ready for the responsibilities that come with it like you will have to pay the amount taken by you back in the given period of time that has been allotted.
Here are the disadvantages of taking a personal loan:-
- You can get trapped in huge debt
If you are taking a personal loan to pay for debt consolidation, then you should remember that you are taking a loan to pay another loan which will ultimately result in taking of a double loan and paying one-off.
If you pay off your credit card loan with a personal loan, then this will create a request for money over time with interest.
- They have a high rate of interest than another loan
This means that personal loan is advertised with a lower rate of interest this does not mean that you will get the exact amount of interest shown on advertisement but will be given according to your credit score and repayment history.
- They may charge origination fee
This means that many personal loans that you take come with an extra charge that is origination fee which is about 1% – 6% of the total amount of loan taken for.
If you take a loan for $10,000, then the fee will be of 4% that will result in $400 of extra charge you have to pay.
- You are penalised for paying amount very early
This means that if you have taken a huge loan, then the fee will also be huge and if you use all the money at once and pay before the payment date, then you will be asked to pay a fine.
As you had money and then also you took a loan to make a purchase of something.
- Fixed monthly requirements are must.
You have to pay the amount monthly that has been calculated, and if you fail to pay then amount of the particular month, then they will write your notice and give you few days to pay it.
If you fail to pay it even after reading the notice and ignoring all the employees that come to your home, then the company can sue you for such actions.
- These attract scammer
Scams are very constant in the personal loan line of work and to avoid these scams you have to ask them for their address and then it is better if you will check it on the official website of Better Business Bureau where you will have to type in the address of you loan provider to see if they are legit providers and are registered or not.
Alternative to personal loan
You can also take a credit card to take a loan immediately for some product you want to buy immediately on the spot.
I hope this article was of some help to you.