Getting a Personal Loan: Things to Consider
You need to have all the information with you before you apply for a personal loan Singapore. There are many things you need to consider. Some things have a direct impact on the cost of the loan. You have to gather all the information about the loan before you take it. It also improves your chance of approval. If you are worried that your loan will be rejected, make sure you consider all things before it.
Getting a loan rejected will have a very bad impression on the lenders, especially if you are taking an SME business loan. Not only will they find your application unsatisfactory, but they will think that you are desperate for the loan.
A personal loan is a loan for personal use. This loan is given to individuals. These loans are unsecured. You don’t need to keep your property as a security to get this loan. You need to provide your personal credit history to get this loan. If you have a good credit history, you can easily get this loan.
It makes you personally liable to pay back the money. If you don’t pay it back, it will become a personal liability. The tenure of this loan is very less. You can get this loan only for a short period of time. Usually, the tenure is 1 to 5 years. The amount of the loan depends on your salary and the institution. The interest rate is very high, though. It can range anywhere 15 to 25%. It is also very easy to apply. You can apply for different types of personal loans.
Things to Consider before getting a personal Loan:
When you have finally decided to get a personal loan, you need to consider these things.
- Credit History:
Credit history plays a very important part of getting a personal loan. If you have a good credit history, you have nothing to worry about. But if your credit history is bad, you need to improve it before applying for a personal loan. If you don’t do this, your application will be rejected. The credit score should be more than 700. When you try to take a personal loan with a bad credit score, you will be charged a higher interest rate. It will increase the total cost of the loan. Also, you might need to provide security, as well.
- Interest Rate:
You need to consider the interest rate as well. Higher the rate of interest, the higher the cost of the loan. You need to compare the interest rates of lenders and types of loans. This way, you will know which option is best for you.
- Cost of Loan:
You also need to consider the total cost of the loan. It includes the principal amount plus the interest plus the fees and charges. This way, you will know how much extra you have to pay to get the loan. You can compare the cost with other lender’s costs to know which personal loan is best for you.
- Repayment Ability:
Another thing you need to consider is your ability to pay back the loan. It will show you if the loan is suitable for you. You need to bale to repay the loan, or else it will become a personal liability. You need to compare the EMI with your monthly income to know how much money will be left after the monthly payment. For example, your EMI is $500, and your monthly salary is $1500. This way, it is easy for you to pay the loan as the EMI is only 1/3 of your monthly salary.
You need to consider personal loan offers. Most of the lenders provide offers and deals. You need to make sure if the deal is profitable for you. If it is not profitable, don’t fall into the trap. Sometimes, an offer might look good, but you will realize your mistake when you take the loan.
- Loan Tenure:
You need to consider the tenure of the loan. If you are looking for a longer tenure, go with a lender who provides seven years’ time period for the loan. Most of the lenders only provide five year time to pay the loan. The tenure can increase your EMI. If the tenure is less, the EMI will increase. If the tenure is more, the EMI will be less. It also affects the rate of interest. When you take a loan for a long period, you have to pay more interest over time.
You need to consider the document options available. Most of the lenders demand normal documents from you. But there will be some lenders who will demand extra documents. If you don’t have that document, go with the lenders who demand fewer documents. This way, you will be able to get the loan easily.
- Avoid Switching Job:
You need to avoid switching jobs frequently. Lenders often demand your wok history. If they see that you have constantly been changing jobs, they will take more time to grant you approval for the loan.
- Lender Credibility:
You need to consider the credibility of the lender before you take a personal loan. Nowadays, many people are offering personal loans. Some lenders are reputed, while others are not. Some lenders are sketchy. They will use malpractices if you make a late payment or don’t make the payment. They will send goons’ after you threaten you. Avoid these lenders at all costs.
- Loan Process:
You need to consider the difficulty of the loan process. Some lenders take a lot of time to process the loan. You have to wait for a long period of time to get the loan money. But there are others who follow a simple process. They will process your loan way faster than others. Go with the loan process, which is simple. The loan should be easy to apply.
These are the things you need to consider when taking a personal loan. It will help you to get a clear picture of the loan process and get the loan fairly quickly.