Some Singaporeans are always frightened when it comes to personal loans. They thought the process would be hectic and didn’t really have much idea about the interest rate.
A personal loan can save you from hundreds of financial torments. If you can’t pay for your education or plan your dream wedding, taking a loan will help you with that.
However, this lending system has its own perks and cons; hence, you shouldn’t apply it for anything and everything. So, when you should consider getting a personal loan, do you have any idea about that?
Don’t worry; here, we’ll cover all the details you need for confident decision-making. So, without wasting much time, let’s get started!
Why Should You Get a Personal Loan?
In Singapore, personal loans are among the most common financial tools just like credit cards. But getting a personal loan is the most stable solution if you are going through financial issues.
Now the question is, why should we prioritize personal loans over any other lending procedures? Well, here are the reasons why we should go for this method.
- Personal loans come with a fixed interest rate which remains constant till the end. In this way, your monthly budget will not be hampered because of any sudden changes in installment rates.
- It offers you a specific repayment period so you can have assurance.
- These loans have lower interest rates than any other money lending method.
- You will get a wide range of repayment plans, and you can pick one according to your ability.
When Should You Consider Getting a Personal Loan? – The Perfect Timing
But that doesn’t mean that you should apply for it whenever you need it and spend the money without thinking about the consequences. So, what is the right time to apply for a personal loan, and how do you get the best out of it?
We’ll tell you about situations when taking a personal loan can be your savior in the following section. Let’s check that part out, shall we?
Get Rid of a Credit Card Debt
We have already told you that you can easily get rid of massive credit card arrears by taking a personal loan. If you have an enormous pile of credit card bills, take a loan and pay it off.
Now you may ask, why would I go into debt to pay another debt? Well, it is a good question, to be honest!
The average interest rates of credit card bills are around 25% per annum. Furthermore, the minimum settlement will be at 3% of the outstanding.
For instance, if you owe $5000, you will have to pay at least $150 a month, just the interest. You’re not paying anything to reduce the actual debt, and that’s unfortunate!
On the other hand, the Effective Interest Rate of a personal loan over three years is around only 8% per annum! Therefore, it would be better to take a loan and pay your credit card bills to get out of a vicious cycle! And you can repay your loan after that without any financial struggle. How amazing is that?
Plan a Wedding
You don’t have to use your credit cards to pay the decorator or buy a beautiful dress to plan your dream wedding. Yes, it seems easy at first, but you won’t want to get sucked in a black hole of debt right after your honeymoon.
Hence, plan your wedding budget carefully and choose a loan plan according to that. In this way, you can have the wedding you desire, and there’ll be no massive boulder on your chest!
Invest in a Business Opportunity
Some of us have visions to take our life to a whole new level. Thus, we are always looking for business opportunities to score big. But you don’t know when the luck will be knocking on your door. And when it comes, you might not be ready for it.
In that case, getting a personal loan can save your future. If you have only $7000 in your hand and you need to invest $10,000, take a $3000 loan and pay it off over time. It will allow you to earn some profit and won’t put much pressure on you either.
Home Renovations and Relocations
We may need to change our living arrangements once in a while, such as redecorating the house or getting a new place. And to do that, we have three options in our hands.
The first one is to spend all our savings, which seems like a bit risky task. Secondly, you can max out your credit card to buy some furniture or to pay off the contractor and keep paying a huge amount of interest every month! And lastly, you can get a personal loan.
When it comes to renovations and relocations, Singaporeans have the opportunity to take a renovation loan. The interest is much lower, you will get flexibility, but you can only spend it on certain fields, such as paying the contractor or buying the place. You don’t have the liberty to spend that money on anything else.
However, some banks will allow you to have secondary renovations loans to buy some furniture. But sometimes, that’s not enough.
In that case, you can go for a personal loan. It will help you buy or fix your place and get some new furniture or other appliances to make your life more comfortable. And then you can work with dedication to pay off the debt.
Protect Your Insurance Policy
When your insurance policy is lapsing, you can go for a personal loan.
As you already know, insurance policies are a long-time commitment. And if you fail to pay some installments, you may lose the amount you’ve already paid. Well, some of us can’t afford to go through that kind of financial loss!
So, if you face this kind of problem, take a small loan and pay the installments to be on the safe side. However, while borrowing money, make sure that the insurance payout is greater than the loan amount. Otherwise, you’ll be at a loss, and that’s what we wanted to prevent in the first place.
One of the worst fears of Singaporeans is the medical bills, as the treatment can be super expensive. Even if you seek MediSave’s help, you will get solutions for some specific conditions and procedures. And the insurance isn’t sufficient most of the time.
If you ever go through anything like that, you can apply for a personal loan and pay your bills with it. And when you get better, you can keep paying the installments without any hassle.
We don’t know what the universe has planned for us; thus, we’re always at risk of falling into awry situations. And suppose you’re going through any unfavorable time as near one’s death or divorce. In that case, you can get a personal loan for financial stability.
It will allow you to pay for the legal fees or any other service without losing your savings. And when you become emotionally stronger, you’ll be able to repay the debt with confidence.
When Should You Not Consider Getting a Loan?
The aim of getting a personal loan is to make your life easier by repaying any high-interest debt you already have. So don’t lend money if you have to-
- Buy any designer item such as a bag, jewelry, and shoes.
- When your business is falling apart, and you don’t have a steady income to pay the installments.
The Bottom Line
A personal loan can save you from tons of financial liabilities. Thanks to its affordable and flexible plans, if you are drowning in debts, this financial tool will be your savior.
Hopefully, you’ve learned when you should consider getting a personal loan. Now you can have a solid financial plan to create a better future.