3 Important Factors That Determine The Type Of Loan To Be Borrowed
In Singapore, there are many types of loans available. Each of these loans come with pros and cons. A good example is the student loans. These loans are offered by the Singaporean government. This is meant for students in higher learning institutions. These loans are often expected to be repaid. This is usually once students have graduated and have got jobs.
A second example of loan type in Singapore is the high-end loan. This includes mortgages offered specifically for development or acquisition of property. Other loans types are business loans, personal loans, and car loans. Each of these loans has different repayment plans, interest rates, and loan requirements.
The borrower needs to have decided the loan type they want to take. This should be done before they can access a loan product. Borrowing a loan has its pros and cons. So as to ensure you get maximum benefits from any loan. Therefore, you need to consider these aspects before getting a loan.
The choice of the loan will be determined by factors like:
Urgency is a factor used to decide on the loan type to take out. This is because several loans have shorter repayment time. This is when compared to other loans available. Most money lending institutions, take a day to approve salary advance. Credit unions take about the same period for their emergency loans.
Due to the risks involved in advancing these urgent loans. The moneylenders usually offer low cash amounts. Additionally, this loan type comes with a short repayment plan. This could mean that it attracts higher rates of interest.
Since credible money lending institutions offer these facilities. The number of Singaporeans that choose illegal moneylenders is small. Getting a loan to fund projects is not urgent. This is because a borrower has taken enough time to make plans. It is for this reason that mortgages incur lower interests. At the same time, the repayment period can go up to 20 years.
Use Of The Loan
Borrowers need to also define the purpose of the loan first. In so doing they are able to work out the right amount. This way they will avoid taking more money than they actually need. At present, there are many salespeople everywhere. They are each trying to persuade Singaporeans to take out loans.
At times they are rather convincing. However, this can be a bad reason for you to proceed and get a loan. This is because this basis for acquiring debt is not sufficient. In this case, the likelihood of the loan money getting wasted is rather high.
In addition, you are going to have a loan to repay. Therefore, clarifying the use of your loan money is important. This is because a borrower is able to choose the best loan type for their needs.
It is important for you to choose the repayment period. This schedule needs to be comfortable for repayment of the loan. This you will need to consider carefully before you approach a moneylender. The monthly remittances should also be pocket-friendly.
Many financial institutions might try to persuade the borrowers to extend the loan. This will usually be over a longer period arguing for lower deductions each month. However, this is not the ideal choice.
Eventually, a borrower will end up paying more. Thus making the lending institution the key beneficiary. When a borrower decides on a repayment period on their own. They are in a position to wisely decide on the amounts.
Unsecured vs. Secured Loans
In Singapore, you can access either an unsecured or secured loans. This type of loan is provided by moneylenders and banks. A loan is considered to be secure when it requires collateral. This is used to back a borrower’s promise to repay. On the other hand, unsecured is based on the reputation and trust of a borrower.
Examples of secured loans are housing and car loans. To access these loans the collateral (the guarantee that you will repay the loan) is your house or car. Should it happen that you cannot repay your home loan? Your lending institutions may foreclose the house.
Sources of Credit
This article is not aimed at recommending borrowing. However, below are different sources of credit available in Singapore. Before you choose to take out a loan. It is important that you consider other sources of funding. This can include friends and family or even government institutions. Some sources of credit include:
- Credit cards
- Licensed Moneylenders; and
- Pawn shops
Be sure to consider the best moneylender that you can work with. Consider the interests offered. This way you need to work on finding the best rates available. Ensure you work with a licensed moneylender.
Always Work with The Best
Hence, take the time to do a thorough research. In so doing you are able to get the best moneylender within your area. It’ll be useful since you can choose the most reliable moneylender. Be sure to only deal with moneylenders. Be ready to work with a lender who can accommodate your conditions and terms. Remember that you do not sign a loan agreement. However, once you are satisfied with the terms. You can go ahead and sign once you look at the loan terms.
As you carry out the research, reach decisions following the search. In so doing, you will be able to find the right licensed moneylender.
There are numerous types of loans available in Singapore. Each of these loans offered to come with pros and cons. A borrower needs to decide on the loan type they wish to take out. This they need to do before they access any loan product.
To ensure that you get maximum benefit from your loan. You will need to consider several aspects before you access a loan. It is important that you recognize that the loan type is determined by things like the purpose of loan, urgency and the repayment period.
Even then, make sure you work with a licensed lender. Therefore, take time to research to get the right moneylender for you.