Factors to Look into Before Taking Out a Personal Loan
There will come a time that the situation will call for taking out a personal loan. However, before you apply, you should understand that borrowing money entails committing to pay the interest on top of the principal amount within a certain period.
Whatever your reason for taking out a personal loan, you should think long and hard before you sign any agreement. To get started, here are the things to consider before you sign or agree on anything:
You should first check the license of the lender. A reliable lender will give documents without you asking. It is imperative that you only transact through a reputable and licensed Money Lender Singapore. This is important so when things go awry, you are protected knowing that there is an entity you can sue for gross misconduct.
The loan type
After identifying a reputable moneylender from Easy Credit Singapore, the next thing that you should do is to determine the loan type you need. Make note that there are many types of loans these days so you must find something that suits your current situation.
Your current financial situation
When you understand your current financial situation, you can identify the gaps and how much you can afford in loan payments. Before anything, you should look into your monthly or yearly budgets. This way, you can decide the loan amount you can afford.
Your credit history
Another thing that you should consider is your credit history. You should be aware that if you have a good credit history, you would be given with the finest rates. With this, you have a lesser risk of defaulting.
If you do not have a good credit history, you can still borrow money but the lenders will tag you as a risk so they will give you higher interest rates. Knowing this, it is important that you check your score so you will know what to expect if your loan application gets through.
The interest rate
When it comes to interest rates, you should look into the details. For instance, a lender may offer a lower interest rate that is appealing at first but it means repayments will continue for a longer period. This is not ideal. You can only sign those papers if the interest rate is reasonable compared to the loan term.
The loan term
Personal loan terms will depend on the lender. However, most lenders offer personal loans that require you to pay back from 1 to 5 years. You must choose a flexible loan term so if ever you can pay the debt within half of the stipulated time, you can get good rates.
How do you plan to pay the loan?
If you take out a loan, you should consider how it would affect your future finances. Your first thought should be how to pay the loan – is it weekly or monthly? Do you plan to pay it off sooner? These factors can help you pick the right loan and ensure that you do not pay for any unnecessary costs.
The penalty charges
You should know what will happen if you are not able to pay your loan on time. If you do not pay according to the stipulated time, there will be penalty charges. These penalty charges will be typically indicted on your credit account.