Sometimes, we find ourselves in a situation where we need urgent cash but don’t have the available resources. In times like these, taking up a loan is the only option. While many tend to borrow cash from friends and family, getting a personal loan in Singapore is a more secure and safe alternative. Singapore's personal loan interest rate is usually more affordable, and the loan is repaid through a monthly installment scheme. Before searching for personal loans online, planning for the long run and managing your finances to ensure financial security and reduce the risk of piling on debts is essential. Here are some ways to handle your finances before applying for a personal loan.
Be Aware Of Your Existing Loans
Before applying for another loan, you have to list any other existing loans you currently have. Take note of the interest rates, duration of repayment, and your monthly repayment amount for each of your existing loans. After knowing your repayment schemes for these loans, you can better plan your finances and manage your money when taking on a new personal loan. You only want to take on what you can handle, which will incur a hefty debt in the long run.Plan Your Monthly Expenses According to Your Income
With your loan repayment coming out of your monthly salary, managing your income is critical to applying for a successful personal loan. Plan your expenses in advance by categorizing your monthly income into separate divisions. For example, you should set aside money for your monthly needs, such as groceries, phone bills, and insurance. A sum of your income should always be put into a savings account, and the remaining will be used to pay off any debts. A tip that many swear by is the 50-20-30 rule, where 50% of your income goes into your necessities, including debt payments, 20% is put aside for savings or investments, and 30% is used for things that you want to treat yourself with, such as a shopping spree or watching a movie at the theatre. By budgeting your income, you can ensure you will have monthly cash to help pay off your loan debts.Decide an Appropriate Loan Amount
Now that you know you can afford a loan that fits within your income capacity, you can decide on how much of a loan you need. Sometimes, you only require a small sum for an emergency, but in other circumstances, you may require a much more significant amount. That said, only loan what you need, as it incurs unnecessary expenses. This may affect where you plan on obtaining a loan, as many banks usually have a five-figure minimum loan amount depending on the type of personal loan you seek. If you are looking for a smaller sum of money to loan out, licensed moneylenders can also be a good option, as they do not have a minimum loan amount. Overall, be cautious and precise about the amount you need and choose a lender that best accommodates your needs.Find an Interest Rate Within Your Means
Shopping for an affordable personal loan interest rate in Singapore could take up much of your time. To narrow it down, the interest rate will vary depending on how urgent you need the loan. For example, bank loans usually have a longer transaction time, as your credit history and background must be checked and evaluated. If you can wait a couple of days for a loan, bank loans usually have an interest rate of 5% to 7% per annum. However, if you need cash quickly, licensed moneylenders do not analyze your credit score, which means you can receive your loan within an hour or two. This speedy service comes at a slightly higher interest rate than the bank, with a maximum rate of 4% per month being charged. With competitive prices in the market, some licensed moneylenders have rates as low as 2.27% per month as well. By figuring out the urgency of your situation and your financial means, you can decide on the type of lender that can offer you a personal loan in Singapore that suits your needs.Be Mindful Of the Duration of Loan Repayment
Once you have decided on your loan provider, it is essential to be mindful of the duration of your loan repayment. With personal loans usually having a monthly repayment scheme, this amount should fit the sum you set aside when budgeting your expenses. The duration of personal loan repayment varies with banks and moneylenders; banks usually have a longer timeline of a few years, while moneylenders’ repayment plans are generally up to 12 months. If you plan on loaning a small sum and paying off your debt as quickly as possible, licensed moneylenders are the better option.Taking on a personal loan in Singapore is an important decision that should be made promptly as it could result in debt accumulation if not adequately planned. Instead, consider your financial capabilities and long-term plan before looking up personal loans online and applying for one.
