At times in life, money could be a bit tight. As you are getting in control of your situation. An emergency expense comes your way. This may be a medical bill that has to be paid off. Or it could be a car repair that needs to be taken care of. It even could be a rental payment that is to be made in soon.
Some individuals may already have an emergency fund. This fund is enough to cover any financial challenges that may occur. However, the issues are with people who don’t have enough cash. And this is in the emergency fund. Additionally, there are those without such funds at all.
There are instances when personal loans offer help. This is because they are, meant to help you cope. And this is before you get the next paycheck. You could use this loan to meet your basic needs.
Below are few things for you to consider. This will help you in deciding if this loan type suits you.
Know Where You Can Obtain a Loan
Establish where you may get the extra cash you need. Normally, licensed moneylenders are lenient with their requirements. This is when compared to requirements set by the banks.
However, you will likely be able to get cash from a moneylender. This is when it’s someone who has been rejected by the banks. Besides this help, you won’t have to bother lots of paperwork. This is when you are applying for a licensed moneylender loan. It’s for this reason that many people prefer it.
Thus they choose to work with moneylenders in Singapore. But be alert of the higher rates of interest that moneylenders offer.
Know The Ideal Time To Borrow A Loan
Because you don’t have the money you need. It doesn’t mean you rush to take out a loan. In truth, loans are tools you have to repay eventually. So when you want to use a loan for some luxuries. Then it’s best to control yourself.
Also, attempt not yield to the appeal to shop. Or possibly, you need to save money for the expensive items. This is in place of visiting the bank to get a loan. And only to use this to fund these items you wanted to buy.
There are many important things for you to consider. This is before you borrow some extra money. Consider the higher interests and the fees involved in your loan. This is things that make it look too unappealing.
For instance, for you to use for mundane things. However, this does not mean that a personal loan is meant only for emergencies. Certainly, you can use a personal loan when you have an urgent expense. Even then, you could use this loan for other concerns.
Some of the other uses include pursuing your post-graduate education. Or you could use it to pay for professional training. You could also use the loan to consolidate your huge credit card debts. If you’ve been accumulating so many debts in several credit cards. Then the personal loan may be used to repay all your debts at once. Consider that credit cards accrue high-interest rates of 24%. This makes debt payments tougher. Once you have several bills to settle using few credit cards.
However, when you borrow enough cash on your loan. Then you could simply repay the debt in one go. Afterwards, you may make smaller repayments for the loan each month. And this will be reasonable for you. The rates of interest will also be lower. This is when compared to what you’d be charged on credit card. This would be from 7 to 15 %. Eventually, it’s worth it to use a loan. This is rather than let the credit card debts accumulate for months or years.
The Singaporean Money Authority (MAS) has put a limit on unsecured loans. The MAS stated that, starting 2019 the limits will comprise of the following:
By 1st June, 2015, debts amounting to 24 times the monthly income needs to be repaid in 3 months.
By 1st June, 2017, debts equal to 18 times the monthly income needs to be repaid in 3 months.
On 1st June, 2019, debts almost 12 times your monthly income have to be fully paid in 3 months.
Other Things To Consider
Once you believe that you are prepared for a loan. Then you will want to think about few things. This will help point you in the right direction. At the same time minimize the stress levels that come your way. One thing to consider is the total servicing ratio (TDSR). It refers to affordability ratio of the loan you have. This limits the entire cash amount you can borrow as a loan. This depends on monthly salary and any existing debts.
Besides the TDSR, it’s best you examine the fees. Consider the charges included when you borrow a personal loan. There are late payment fees and annual fee. This charged on borrowers by authorized moneylenders. When it happens you eventually pay your loan after the deadline. Then an extra 2.5 % is placed additionally to your existing rates. This overdue amount is what can make it harder for you. This is when you consider your loan repayments. This means your instalment will be inflated. Thus avoid making late payments to help you save on this.
Make sure you look for the ideal legal moneylender. From them, you can obtain some cash for your needs. You also have to think about their reputation. Look at the lender’s reputation through reviews. Also be sure to confirm the validity of the license.
Consider the loan products and services they offer. Once you’ve received the funds for your loan. You need to be more disciplined in repaying the funds you owe. Avoid paying the debts late not to incur extra charges onto your loaned amount. While you adhere to the advice and tips mentioned above. You will have a pleasant experience when borrowing. And you’ll get to meet your financial concerns.