Personal Loan Myths: Why You Shouldn’t Believe Them
When you are in need of fast cash, yet have some misconceptions. This is as regards to personal loans offered by the licensed moneylender. Here is a guide to help you clear them up. Personal loans provided legal moneylenders are the last result. This is mainly for customers who urgently need funds. Most do not use this option for credit. They instead prefer to utilize cash withdrawals offered through credit cards.
In using this kind of cash loan, you will be able to fund any item in the ranges of S$500 to S$100K. The repayment plan is flexible. Then you are supposed to pay low rates of interest on the personal loan. It can be that you are still unwilling to use such a loan. It may be this is caused by some of the below common myths on personal loans.
Focusing On Interest Rates
Although you need to check the interest rates charged. This should not be the goal. This loan attracts other charges which include late payment costs, admin fees. Other charges are the interest made on the missed payments.
Some moneylenders might even charge penalties for early settlements. This is because they lose income on the interests charged. Ensure you go through each of the charges. That is before you make the final choice.
It Is Only For Salaried People
For those Singaporean who are self-employed and those on contract employment. It is possible that you are not aware of this. But you are also eligible for the fast cash loan from licensed moneylenders. What that will be required of you is that produce the relevant documents. This will include things like employment and business. In addition, you will need to provide SingPass, bank statements. Other relevant documents may be required.
Personal Loans Need Some Security
Although banks will insist on having some kind of security. That is for the large amounts in a loan. The private moneylender will instead offer you the loan and without asking for security.
Application Process is Complicated
This is far from the truth. It is easy to apply for a loan online from licensed lenders. Ensure you furnish the right documents and the proof in person. The application will then get processed fast. You will be able to get the cash in under an hour after approval.
Credit Card Purchases Are Cheaper
Even if your credit card will provide a larger credit limit. However, they charge much higher interest on repayments. Taking out loans from moneylenders come at lower interest costs. According to the new rules for moneylenders. The monthly interest a borrower gets to be charged should not exceed 4%.
Ensure you compare different interests payment on the credit cards. This is against those of licensed moneylenders in Singapore. Do this before you decide on the loan that suits your needs.
Outstanding Loans Affect Loan Eligibility
If you are concerned about getting rejected due to EMI payments on the home loan. Legally authorized money lenders do not get rid of the application. That is because you have an outstanding loan. They might offer you a smaller amount instead. More so if you have a huge debt.
Borrowers Need Good Credit Rating
Realize that credit scores are crucial. Particularly for the banking institutions in Singapore. Yet, a lower rating will not stop you from getting personal loans issued by moneylenders. These lenders are less likely to refuse your application because of lower scores. Apart from when a borrower has a record of defaulting on the payments.
Some Benefits Of Personal Loans:
Use For Different Purchases
Benefits of personal loans include you may use the cash for any purchases. It is possible for you to use a personal loan to start starting a business. You could use it to buy a car, or even renovate your home.
Other types of loans can place limitations on how the funds can be used. Not the case with personal loans, thus they are a flexible option suitable for most situations. It is not a good idea for you to take out a personal loan, especially for the purpose of trying to grow your score. The score improvement will not be worth the total costs.
However, when the personal loan is meant for planned purchases. This you could have purchased using your credit card. Thus, it is no point in getting a personal loan for the purchase instead.
Lower Interest Than Credit Cards
Many personal loans have lower interests than credit cards. Especially when your credit is in good shape.
However, when your credit score is good. You may be eligible for the personal loan. This is a big difference, more so when you want to make a larger purchase.
Due to the lower interests, you could use personal loans. Especially for consolidating high-interest debts. You can use a single larger personal loan for settling several smaller debts. Some of this includes student loans and credit cards. This will be very helpful when you are struggling to make timely payments.
It can also help when you are not able to keep track of all the accounts. Merging everything into one will help you to manage the debt repayment plans easily. At the same time, you will save money for the long term.
Grow Your Credit Score
When you have not used a diversity of the credit types available. The personal loan will be helpful. The benefit of personal loans is they add towards your credit score. Based on the types of accounts you hold.
Revolving accounts, such as credit cards, stand for one credit type. The accounts imply that you can manage loans that are not repaid on frequent schedules. Thus, there is a limit and provided you make repayments to create room. This allows you to keep using credit.
Most Singaporeans do not use the personal loan option of credit. They instead prefer to use withdrawals provided through credit cards. By using the personal loan kind of cash loan. You will be able to pay for any item whose price ranges from S$500 to S$100K. additionally, the repayment plan for this loan type is flexible.