The fundamentals of a Personal Loan

A personal loan is financing that individuals seek to meet their current financial needs. These types of loans have low interest and are unsecured loans, meaning the borrower does not have to pledge any collateral.

Since the personal loans sg are not secured, it makes them hard to access and have strict terms because of their high-risk potential and the lender does not have a guarantee of receiving the funds back. If the loan defaults the lender absorbs all loss.

Just like regular loans, personal loan in Singapore is also is given with a specific time frame within which the borrower is supposed to repay the principal amount with some interest and fee.

FACTORS TO CONSIDER BEFORE TAKING A PERSONAL LOAN

1. The rate of Interest. Like stated earlier on in this text, personal loans in Singapore do not need the borrowing party to have security against the loan. This has made these kinds of loans to have high-interest rates. Therefore, before making an application for the loan ensure that the institution offers lowest interest rates compared to others. It does not just suffice to get low interest you should also consider if the interest is fixed or varies within the loan period.

2. Credit History. Every financial institution before giving out a loan in Singapore they have to look at the credit score of the individual taking the loan. All banks have a KYC (know your client) which is a regulation policy to get information on their clientele. All credit history is analyzed and any red flags such as pending dues might hinder you from getting the loan.

3. Penalty Charges. Before taking a personal loan sg also look at the charges that would accrue if you do not pay the loan in time. Most people when considering the loans are blinded by the amount they receive and do not look at the affordability of penalty levy in case it happens.

4. Your intent. Before applying for a personal loan also consider your intentions. What is the purpose of taking the loan? Is it for a specific need or it is just for pleasures that can be avoided. Loans come with a lot of responsibility and require the people that take them to have a clear purpose for the use of the money.

5. Repayment Plan. After you have landed the best personal loan in Singapore, consider how you are going to pay for the loan. The sources of your income should dedicate these decisions such that you can know how long you can service the loan.

THE APPLICATION PROCESS

After choosing the bank that you feel is best suitable to meet your need. The eligibility criterion is you must be 18 years or older, show proof of income then have a good credit score.

You will then be needed to provide your government issued identification and other financial documents together with a tax identification number. When the lender is satisfied with your documentation, they will give you provisional approval. You will be required to sign some documents if you agree with their terms and conditions to signify consent and full approval.

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