One of the loans that an individual can borrow from a bank is a personal loan. It is a type of loan that allows the borrower to use at one’s discretion. It is often difficult to obtain due to the strict qualifications that banks require from the borrowers. If you are thinking of one in the near future, there are some things that you need to know about the loan.
Personal Loan is Unsecure
An unsecure loan is one that doesn’t need an asset as collateral. If an individual defaults on a personal loan, the lender can’t take one’s asset as payment. This is one of the reasons why banks have imposed strict requirements on personal loans. The lender can’t get any asset from the borrower if one decides he can’t pay the loans anymore. Even though the lender can’t seize any asset from someone who defaults on the payments, it can take other actions, such as hiring a collection agency, filing a lawsuit, or reporting late payments to credit bureaus.
Personal Loan has Fixed Amount
The loan amount depends on the borrower’s credit rating. The better the score, the bigger the loan amount will be. There are some loan providers that are more lenient with the amount they allow a person to borrow. There are some lenders that provide higher loan amounts if the borrower has a good standing with them.
Personal Loan has Fixed Interest Rate
Most personal loans come with fixed interest rates. The rates don’t change for the life of the personal loan. Just like the loan amount, the interest rate is based on the credit rating of the borrower. The better the credit rating, the lower the interest rate will be. Lower interest rates mean the total cost of the loan is much lower, compared to a higher interest rate. There are some personal loans that have variable interest rates that change through time. Be sure to read the fine print to determine whether the interest rate is fixed or variable.
Application for a Singapore Personal Loan
When applying for a personal loan, it is important to pick the right moneylender. The right one will provide better loan for one’s needs. One such licensed Singapore money lender is Excel Credit. Its personal loan service provides fair interest rates and has good customer service.
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