Towards the end of 2018, it was estimated that personal loans were the fastest-growing loan products not only here in Singapore but worldwide. The reason behind the popularity of personal loans in Singapore is because they do offer low interests for people with good credit scores. A personal loan can help you in so many ways. Whether you have an upcoming wedding, need to pay for school fees or any other type of expense, a personal loan can save the day. Are you considering getting a personal loan in Singapore? Then there are a few things you should know before getting one.
1. How Personal Loan Works
Most people blindly take personal loans without knowing the specifics of this kind of loans. First and foremost, it is an installment type of loan that is paid back at a particular interest during a specified duration. The repayment period for most personal loans ranges from 12 to 84 months.
2. What are The Different Types of Personal Loans Available
When it comes to personal loans, there are two types. We have unsecured loans and secured loans. The unsecured loans don’t require you to put up any collateral. To qualify for an unsecured loan, the lender must examine your financial history. A secured loan, on the other hand, is backed up by collateral. This could be your car or mortgage. Secured loans are mostly given to people with a ‘not-so-good’ financial history. Defaulting on the loan may result in confiscation of the collateral.
3. Where to Get a Personal Loans in Singapore
Once you know how personal loans work and the different types available, the next thing that should be on your mind is where to get a personal loan. You might think that banks are the only place where you can get a personal loan in Singapore. But there are other places. Peer to peer lenders, online lenders, and credit unions are ideal examples where you can get the lowest interest in personal loans. By doing some research, you will definitely find the best source of personal loan Singapore.
4. Can a Personal Loan Impact Your Credit Score?
During the application process, the lender will pull down your credit score. In the financial world, this process is known as hard inquiry. And it usually takes off a few points from your credit score. You should ensure that you check and compare the rates of different lenders and pick one who won’t lower your credit score.
5. Interest Rates and Additional Fees
Your primary objective when looking for personal loans is to land on one with the lowest interest possible. This will ensure that you pay a reasonable amount when repaying the loan. Note that, these interest rates do vary from one lender to another. The interest rates of personal loan in Singapore ranges from 5% to 35%. This will depend on a variety of factors such as your credit score and the loan term. You should also consider additional fees such as the prepayment penalties and origination fees.
A personal loan can dig you out of a financial mess. It is an ideal option if you require extra money to cater for a particular expense. Before you apply for a personal loan in Singapore, it is advisable that you understand all the above matters.