There are two polar reactions when it comes to taking out personal loans in Singapore. On the one hand, you have the people that don’t want to take out personal loans from banks or any other financial lending institutions, because Singaporeans have long held the belief that loans are terrible for your finances. Also, many Singaporeans tend to abuse the concept of taking personal loans, and instead run up huge debts that they have literally no hope of paying off (except with another loan, which they are not likely to get).
On the other hand, taking personal loans from financial lending institutions is a very common practice with Singaporeans, and it has been for a very loan time. While some frequently take out loans for any number of seemingly frivolous reasons, such as for gambling purpose or settling other debts at the last minute; others carefully plan what they want the loan for before taking it, and the pay back in the shortest time possible. Other Singaporeans prefer to take out a personal loan than
Many of us prefer to take out a personal loan than asking their family or friends for loans. These two very different reactions to taking out personal loans don’t change the fact that sometimes, it is necessary to take out a personal loan in Singapore. If the situation at hand is very dire or has a deadline, and you do not have the funds to meet that need, then the quickest way to get those funds is to take out a personal loan.
Singaporeans have various reasons for taking out personal loans, all depending on what they consider to be so important as to warrant taking out a loan. Some of these reasons include:
We need money for school, whether at home or abroad, and most of them can’t afford to pay their fees out of their pockets. As such, they take out personal loans in the form of school loans and pay their way through university. Even though Singaporean university students pay their fees at a subsidised rate, that doesn’t change the fact that they have to pay, and some do not have parents who are financially buoyant to pay them through school.
Tuition fees in local universities alone can reach up to 34,000 Singaporean dollars a year, and that is just for tuition. Gong overseas to attend a university may cost you up to S$35,000 a year in fees, proving that studying abroad can be just as expensive. Personal loans help with these educational costs.
For Housing And Renovations
Singaporeans usually take out personal loans when they are buying a house or when they are renovating one they just bought. Personal loans in the form of housing loans are very common for Singaporeans to take, as it is highly unlikely that your median monthly income is enough to cover the cost of getting a Built-to-Order flat, which, on average, has four bedrooms, making it a rather expensive habitat.
Personal loans are also taken out for house renovations: it has been shown that, on average, it costs S$50,000 to renovate an HDB apartment flat. Singaporeans who earn the average pay at the managerial level will not be able to foot the bill for an HBD renovation on your own: you will need to take out a personal loan, and Singaporeans typically take those loans just for that purpose.
For A Car
Owning a car in Singapore is a capital-intensive effort. Getting a car requires, even more, money than the car is actually worth. Owning a car in Singapore makes you liable to huge taxes and Certificate of Entitlement (COE) payments, and this COE coupled with the first payment you make in a car alone can be well into hundreds of thousands of Singaporean dollars.
Singaporeans who really want a car but cannot produce most of the financing necessities to get one (which could be up to 40% of the car’s total value) usually take out personal loans for this endeavour.
For A Vacation
This may seem odd, but yes, some of us do take out loans to go on vacations. It is a very normal thing that we do, and it probably rates as one of their most favourite thing to do after eating.
As getting access to personal loans gets even easier, more Singaporeans take out loans just so that they can take their families away for a holiday. Most of the time, this isn’t due to a lack of funds, but it is because the money available has been slated for something else.
The Renewing Of COE
Owning a car means that you also get a COE, and COE prices tend to be higher than the actual cost of the car itself. Personal loans are the preferable option for settling these COE renewal payments, since you cannot use a car loan to renew a COE.
For Debt Consolidation
Debt consolidation refers to the process of taking out a loan to pay off other debts that you may have, such as school loans and credit card debts. This may seem counterintuitive, but because the interest rates on personal loans are low and very steady. You may have incurred debts that have high-interest rates that also fluctuate, seemingly at will.
A personal loan with affixed interest rate is a better debt to have than those with high rates that change with the wind, such as credit card loans.
Wedding in Singapore is a grand affair. Especially with families only having one or two children, many ageing parents and grandparents hope to see their child marry off in a lascivious way completed with wedding banquet at a reputable hotel. This will often set back at least 20 to 50 grand.
Stepping into the workforce for a couple of years and with savings probably depleting due to the new house, for many young couples, taking out a personal loan may be the only way to fulfil the elder’s wishes for a grand celebration. Another alternative will be to wait and save for a couple of years before tying the knot.
There should not be a stigma to taking out personal loans especially if the intention is for a good cause. Sometimes it is necessary to take out a personal loan to assist you during a dire situation, a solution is better than none ever.