Sometimes, getting a loan is necessary.
You need to settle some medical bills and you are low on cash? Get a loan.
Have you some bills to pay before your next salary? Get a loan.
Have you to make car payments? Get a loan.
Getting a loan is a good idea. You can borrow from friends or family. You can exchange valuables at a pawn shop for some money. These are fairly easy ways to get loans. Then there are personal loans.
The hype about a personal loan makes it sound too good to be true. It can be an unsecured loan if you go to a licensed moneylender. You can get a personal loan instantly, in cash, from a licensed moneylender. Before you go for a personal loan, however, be sure that you can repay it. That said: try your possible best not to get a personal loan. Personal loans are some of the most expensive loans to get in Singapore. The fact that they can be used for just about anything shouldn’t fool you. Repaying a personal loan can be tough. If you need money for payments on your car, get a car loan. Have medical bills to pay? You should opt for insurance. An emergency sprung up out of nowhere? Borrow from a relative. Better yet, you should have an emergency fund for such situations. Need money for a vacation? You should first decide if that vacation is really necessary at this time.
Nevertheless, there are some situations where a personal loan is necessary. In these instances, personal loans are your best bet.
Here are three situations where it is advised that you obtain a personal loan.
- Get a Personal Loan to Get Out of Credit Card Debt
Credit card debt is a serious issue for Singaporeans. Studies suggest that it is very easy to spend money with credit cards. This is because the money isn’t physical, i.e. you can’t see the cash. So you just make purchases and overspend using your credit cards. Another thing you may not realize is that credit bills have staggering interest rates. And every month you default on repayments means another stain on your credit report. So, it is a great idea to obtain a personal loan to pay off your credit card debt.
You may think that this still leaves you with another debt. That is true. But it is preferable to repay a personal loan than credit card bills. For one thing, the interest rates on personal loans are lower.
Banks may offer the least interest on personal loans, but they are harder to acquire. Plus, you may have to pay a lot in application processing fees and annual fees. That is how the banks make up for the low interest they charge on personal loans.
A licensed moneylender is a great option for personal loans. Their requirements are minimal. Processing your loan application takes minutes. Plus, there are many licensed moneylenders to choose from. Compare their interest rates and their terms and conditions. Then you can choose the moneylender you want and set up a loan repayment plan that suits you.
You should also burn your credit cards. Use cash only. You will be less likely to overspend and fall into debt.
- Get a Personal Loan to Settle Huge Credit Card Payments
There are instances where you have to make huge payments using your credit card. You are someone who is very particular about paying off your bills on time. Then you have to pay a lot for something that usually requires a free 30-day trial. You decide to pay for it with your credit card, and then take out a personal loan to clear the bill. You have to know that credit card companies want you to spend a lot on your credit cards. They can charge you a lot of money as interest only when you do this.
For instance, there is a way some card companies charge you interest. Maybe you made a transaction of S$3500. That is huge. They will charge the appropriate interest on that, which is huge. After you have paid off the bill and you have S$35 to pay, the company will still charge you interest on S$3500. The interest is charged on that original transaction amount until you finish paying it off.
As such, it is cheaper to take out a personal loan and repay it. All the rewards on your credit card will still come to you this way as well.
- Get a Personal Loan to Settle Emergency Cases
As said earlier, you should have an emergency fund for emergencies. However, it is true that there are circumstances that delay the setting up of such a fund. And then an emergency arises. Now you need a loan.
Not every financial need requires a personal loan. You should understand this first of all. If the situation is such that you cannot delay, then a loan is a good idea. Situations such as mortgage, car repairs, or something health-related may require instant monetary attention. These are good reasons for getting a personal loan.
If the emergency is a wedding, well, most would advise against getting a personal loan for that. Weddings can be postponed. No one wants to start happily ever after paying off loans. If your emergency is a vacation, you need to take a good look at your priorities.
A licensed moneylender is a good option for getting a personal loan. You can get the cash just two hours after applying in most cases. You can compare interest rates of several moneylenders and choose one. You don’t even need to have good credit to get a personal loan from a moneylender.
Pawnshops are another option, as long as you have something valuable to exchange. The option with the lowest interest rates is banks, but you know how banks are. Assess the situation you are in critically before going for a personal loan.