A lot of people who have never borrowed money from anyone have reservations in getting a personal loan from banks, moneylenders, credit unions, and other financial institutions. Who wants to pay for interests, anyway? But while it has its downsides, a personal loan, when spent wisely, is your best option to pay off your legitimate expenses.
The Benefits of a Personal Loan
If you need a large sum of money, you can enjoy a higher potential borrowing limit with a personal loan than a credit card loan. Some online lenders in Singapore are even less rigid than traditional loaning structures, which means you can have a shot in getting your loan approved even without collateral. Sometimes, all you need is a valid ID, tax statement, and your latest payslip to apply. Plus, they offer quicker approval processes and turnaround times than most banks and financial institutions.
When to Borrow Money
Knowing when to borrow money can make the difference between living a financially secure lifestyle or falling into a mountain of debt. Here are some instances when getting a personal loan is your best option:
- You have multiple existing loans. Many borrowers use their debt consolidation loan proceeds to pay off their loans in various accounts in full. This way, they’ll only need to pay one account (the lender) instead of managing a multitude of credit lines. Usually, personal loans also offer lower monthly payments and interest rates than all the debt accounts combined. When done correctly, this will help improve your credit score and lower your credit utilization ratio if you’re paying off credit card debts.
- You need money for a significant one-off purchase. If you’re buying a new car, having your house renovated, or going on a vacation but don’t have enough money to pay for the down payment, getting a personal loan is the way to go.
- You need fast funding for an unexpected expense. Significant medical bills and urgent home or car repairs sometimes happen. Of course, getting insurance for these things is still the best preventative measure. You could also use up your savings or emergency funds. If all else fails, look for a licensed moneylender in Singapore who can fund loans on the same day.
- You’re planning a major life event. Major life events such as a wedding need months of planning and preparation. Although you’ll most likely save up for this, some suppliers, like catering companies and venues, require advanced payments a year before the date. The same goes for child adoption. In most cases, you need to pay for upfront costs, such as legal fees, agency fees, medical expenses, and more. If you don’t have funds for such cases, get a personal loan.
- You want to start a small business. Provided that the loan’s principal is enough to fund your capital costs, it is advised to get a personal loan to start a small business. Most unsecured loans offer lower interest rates than commercial loans.
Once you’ve figured out that getting a personal loan is the most viable option for your situation, it’s time to shop around for the best lenders. Again, you have banks, moneylenders, credit unions, and other financial institutions as options. If you decide to inquire at online moneylenders, make sure they are licensed and regulated by Singapore’s Ministry of Law.