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A personal loan can help you grow without affecting your financial position now and in the near future. However, most people make big mistakes when taking these loans. Some of these mistakes cause them to make bad financial decisions and live with the consequences for the rest of their lives.
First, never get a personal loan without shopping around for the offers available. When shopping around, do not just compare the interest rates charged by different lenders. Other charges like the processing fees and other hidden costs will also affect the money that you are getting. There are cheaper loans out there so compare all the terms before making any decision.
Additionally, before you get a personal loan, it is always advisable to know if you are comfortable with the terms and conditions of that loan. Lenders give so many conditions on their small print that sometimes you may not see before signing the loan. For instance, there are cases whereby lenders will increase the interest rates and the loan you already took will be affected. In other cases, lenders will ask you to pay some commission in case you want to settle your loan early. Know all these facts so that you don’t get surprised in the future.
It is always good to take a loan which has some form of insurance. This one will help you pay up for that loan in the event of illness or unemployment. However, you will still have to pay up for this insurance cost. Compare the cost of insurance offered by different lenders and then base your decision on this, among other costs.
When it comes to the personal loan, it is always good if you lower your interest rate by borrowing more. There are so many lenders who charge lower interest rates when the loan amount increases slightly. Instead of applying for more than one loan and then paying multiple interests, you would rather borrow more money by taking one big loan.
Finally, compare secured and unsecured personal loans. With secured loans, the interest rates are likely to be way cheaper than the unsecured loans. However, the level of risk is way higher when it comes to a secured loan. If you do not keep up with the payments, you may lose your property which is acting as security for the loan. Most importantly, choose a personal loan that has favorable terms.