It is not uncommon nowadays to hear about people having financial difficulties.
Even if you are rich or poor, money will always be a problem because of things like bills, sudden expenses, accidents and other related issues. When it happens, it is often that we panic and think of ways to fund that monetary problem without harming our daily expenses and budget.
Fortunately, Singapore has several options for you to choose from when you do have a money dilemma. One is by going to a bank and seek a loan and the other is by going to a moneylender and getting a personal loan.
Depending on how immediate your problem is, it is advisable to get a personal loan from a moneylender than by going to a bank. Normally, you will have to wait for a few weeks before you are granted a loan from the bank and they require several documents to see your credit history.
When you apply for a loan from a moneylender, you only need to present a few documents, wait for a few hours, and get the cash immediately. If your credit rating is low or you do not have a credit history, you can still get a personal loan approval from moneylenders.
However, moneylenders nowadays are getting a bad name because some borrowers tend to abuse their borrowing rights because they could not understand what they just applied for.
If you plan to seek out a personal loan with a moneylender, here are some of the questions you should ask before you borrow:
- Are you borrowing money to pay off another loan or debt or pay a luxury?
If you need a personal loan to pay another loan, it shows that you are in serious debt since you will remain in debt even if you have paid the other debt in full. Even if they provide faster loans and are open to flexible loan options, they are required by law to do a background check on your profile to ensure you will be able to pay your dues before they approve your loan. If you have a debt problem, you may not be able to get an approval.
Should this happen to you, you should take time to visit a debt manager to consider all the options you can try to manage your loan repayments or debts.
Meanwhile, if you are loaning to pay for a luxury, like a car which may depreciate in value in the future, it is best you do not take a loan. Only seek a loan when you will use the money that will provide long-term benefits like paying for a home for your family.
- What are available options for your situation?
Like with most products, cash loans from moneylenders come at various types and prices. Some are meant for just one use like for business, cars, and homes. Personal loans also come with various prices and each moneylender has a different price as compared to the others.
Before you apply for a loan with your chosen moneylender, make sure you check out their rates and pick one that works well for you.
It is also advisable to pick a loan that would permit you to pay monthly because they are cheaper to pay for. Some loans are payable weekly, but they do charge higher and it does pose a higher risk to your credit rating and finances.
- How much do you need?
When your paperwork has been approved, you can get any amount from your moneylender for your loans. However, if you are after an unsecured amount personal loan, moneylenders in the country are obliged by law to check your current personal income to assess if you can pay the sum back regularly.
For example, if you have an income of less than $20,000 annually, your loan limit will be $3,000. If you earn over $120,000 yearly, you can borrow any amount from a moneylender.
Always make sure you compute the actual amount you intend to borrow and look into your capacity to pay for it. If you pick a loan which covers the amount you need but doesn’t match your payment capacity, you may not be granted a loan in the future.
You can also try to conserve the money you can borrow. Only get small amounts of the loan and leave some behind with the lender. In this way, you can pay for what you just used and still be able to borrow again.
- What is the interest rate on your loan?
Sometimes, the most common reason people are unable to pay their loans is that they did not know they have gotten a loan with a very high-interest rate. In Singapore, interest rates are capped at 4% per month for all loans, both secured and unsecured. Your income would also not determine your interest rate on your loan.
If you are late with your payments, a 4% interest rate is applied monthly.
- Are there extra fees you need to know?
Loans also come with extra charges depending on how you fixed your loan with the moneylender.
Fortunately, a moneylender can only charge fees aside from the interest when:
- When you are late in your payments, a 4% late interest is added.
- You will also pay a late fee of $60 on top of your repayments.
- Legal costs will also be charged when a loan is recovered.
Before you sign a contract with your chosen moneylender, ask their extra fees and read the fine print of your contract. Also, ask them to explain to you why these fees are placed.
Although they are easy to apply for and receive, personal loans should not be taken lightly. Before you go to a moneylender and sign your contract with them, you must be aware of all the aspects the loan will entail as you pay it. If you do not, you may find yourself in an even more precarious situation and disable yourself from being free from debt.