Personal Loans – Why choose them?
There are times when people would need money more than what they already have. Others would turn to credit cards for quick fix in their money problems but sometimes, credit cards can’t just make it work and that is where the loans will become your best option. Over time, personal loan became the best option for most people.
What is a Personal Loan?
We have gotten used to the traditional loans with our banks wherein we put up collateral such as your car or your house in order for your loan to be approved. This collateral will be repossessed by your lender if for any instance you won’t be able to make your payments for the loan. This type of loan comes with a very low interest rate however it can become a risk for you if you can’t make the payments. Good thing we now have this Personal Loans. This type of loan would not require you to give collateral but the interest rate and amount to be loaned will be based depending to your creditworthiness. The bank or certain companies offering personal loans may consider stuffs like your income reports or your credit score. Why did they call it personal loan then? Because you can use the money for personal use – like if you want to buy things for yourself or use it for a vacation. Unlike with traditional loans, it requires you to use the money you loaned for a definite purpose such as to pay for your car or your new house.
Difference between Singapore personal loan from licensed moneylenders and banks
There are some differences between getting a personal loan from licensed moneylenders vis a vis banks Banks are key institutions and will consider lending you money after a comprehensive review of your financial standings such as your credit history. Also, the amount bank lends to you will be several times your salary. If you have sufficient salary history and also enough time for bank considerations, then Singapore personal loan from banks will work for you.
However, if you are looking for emergency funds that are smaller in amount such as half a month of your last salary drawn, then you are better off borrowing from Singapore licensed moneylenders as they are able to assist you with minimum documents to be provided. Also, people who just changed jobs will be considered by such moneylenders for smaller amount to be borrowed.
Benefits of Personal Loans
It’s instant cash. Yes it is. Personal loans have a very brief process for the application with faster turnaround time. There are also people who do not want lending money from banks because they don’t seem to trust them. These types of people would want to turn to other alternatives to look for their financial aids. Personal loans also have a fixed rate. It means that the interest of your loan given to you won’t change all throughout the payment duration of your loan.
Downsides of Personal Loans
Not all but some personal loan lenders tend s to have high interest. If your credit score is not as good or your monthly income is average, you might be given a high interest rate. One way in securing better payment terms and lower interest rate is you can have a family member or co worker to co-sign with you to guarantee the payment if in case, you don’t have the means to make the payments. Unfortunately, not all lenders of personal loans have the interest of helping their borrowers. Some have these hidden charges and you won’t even notice them if you will not read the contract thoroughly before signing or committing. Good thing here is, there are top personal loan services who don’t charge any fees aside from the usual rejected payments or late fees.
Personal loans are most of the time the last resort for people who don’t have a brilliant credit score or for those who don’t have their own house, car or other assets for collateral. Personal loans can be a sensible aid to people’s financial difficulties or needs.
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