In an ideal world, you would never need a loan, and be able to live your life perfectly within your means. However, in the highly volatile modern world, plenty of unforeseeable circumstances ruin even the best thought of plans. Everyone will likely at some point of their life incur a large unforeseen expense such as their car breaking down or hospitalization fees. At this point, it may be worthwhile to consider taking a personal loan from a licensed money lender in Singapore.
However, before you start researching on the different loans available, you should first determine under what circumstances would it be justifiable to take a personal loan and if it is applicable now.
Favorable Interest Rates
This is largely dependent on the borrower’s circumstances such as monthly income, as well as the effective period of the loan. Nonetheless, you should also consider comparing it to the interest rates on other debts and investments that you may have.
In the former, you may have existing credit card debt that you are unable to pay off. In such a situation, taking a personal loan to pay off the debt could be an effective solution if the interest rates offered are lower than that of the credit card.
Another applicable situation could be where you have an upcoming payment that your cash flow is unable to match. While you have long term investments that could be liquefied to pay off your short term financial obligations, but the rate of return on these investments may be superior to that of a personal loan. In such a situation, assuming a proper risk assessment is done, it may be more worthwhile to take a low interest personal loan first to pay off the debt while retaining the long term investments in hope of realising the predicted returns.
Essentials and Emergencies
Personal loans offer a relatively quick and easy cash injection to help with unforeseen costs. However, each loan taken increases the risk of debt and payment default, as such a cautious and disciplined approach to borrowing is encouraged. Simple questions that you can ask yourself include – is the expense necessary? Can you live without it? Does it hamper your day-to-day activities? Depending on your answers, the expense may well be a necessity or a luxury.
Reputable and Responsible Lenders are willing to Loan Money to you
If reputable and responsible lenders are unwilling to fulfil your request, then they are likely to have good reason for doing so. In contrast, irresponsible lenders have no qualms of loaning you amounts that they know you will be unable to pay off, thus saddling you with never ending debt. In the event that you are unable to secure a loan from reputable lenders, do talk to them to understand the misgivings they may have over your debt situation.
Unlike credit card debt, personal loans often include terms that allow the lender to take legal action against you for failure to pay off the loan within the agreed allocated period. As such, you should pay close attention to the fine print of the loan agreement and be clear about the late payment penalties. Only if you feel comfortable with the risks, should you go ahead and sign on the dotted line.
Personal Loan Singapore
In this article, we have covered simple measures to help determine if you should take a personal loan. To find out more, do approach a licensed money lender. In Singapore, all licensed money lenders are regulated by the Registry of Moneylenders and thus will only offer loan terms that meet the requirements of the Moneylenders Act and Rules. As such, you be assured of ethical product promotion and debt collection practices.