Years ago, credit loan Singapore was only given by banks, and it took a long time before they were processed. Nowadays, there are many money lenders, and the process has become shorter and easier. Does it mean that repaying has also become easier and quicker? Definitely no!
Before you get enticed by these loans, it is wise to consider these four things listed below.
Interest Rates
Loans are not given for free. In any case, the money lenders are in business. Money lenders charge interest rates depending on the amount given and the loan repayment period. The more the amount borrowed and the longer the repayment period, the higher the interest rate. Money lenders charge interest rates because of the risks involved.
Besides the interest rate, there are other charges the lender might have, such as administration fees, processing fees, and appraisal fees, among others. You should take into account all expenses, accrued interest, and the principal amount to finalize the lender.
Repayment Term
Check out the repayment period for the loan. Remember that the repayment period determines the total cost of the loan. If the re-payment period is long then the total cost will be high, and vice versa is true. However, a long repayment period could work to your advantage because the monthly installment will be low and less strenuous. If the repayment period is short the amount paid per month will be high.
Borrowers should always make sure that they pay the monthly installments on time to avoid penalties
Ability to Repay the Loan
Before taking the loan, assess your monthly expenses against your monthly income. If your expenses eat out all your monthly income, then I highly doubt you will be able to repay a loan. If you are left with some savings, you will definitely take part to repay the loan.
This is a great way to assess if you will be able to repay the loan and also can help you determine the period you need to repay the loan. Choose the best payment term and pay the loan as soon as possible because the longer you take, the more interest you will pay.
Do you Really Need a Loan? If Yes, Then What Type of Loan?
When you take a loan, you not only pay back the amount given but also pay the interest rate. That accrued interest is money that you could have used for other purposes. Borrowing money is rarely the best option. There are other ways to get things that you really want with proper planning. For example, if you are planning on going on a holiday, start saving early enough. Avoid borrowing for non-essential items such as a new phone.
If you really must take a loan, then find out the type of loan you need. There are many types of loans, all attracting different interest rates. There are loans such as mortgages, student loans, equity loans, and personal and business loans, among others. If you are not sure of the type of loan to take, you can consult a financial advisor.
