When it comes to a Singapore fast cash loan, personal loans are the most preferred by people. They have a variety of benefits, all of which includes zero collateral. The main downside is on the interest rate, which can be high.
With so many information out in public about personal loans, we are here to guide you through what is false and what is true. Before taking out any personal loans, it is best to ensure that you learn everything you need to know about personal loans beforehand. To get you started, here are 4 crucial things you should know about personal loans.
No collateral required
Unlike secured loans, which often need insurance, personal loans are the opposite. You can apply for them quickly and receive the loan even before the day has ended. Thanks to technology, you can also use online pages or mobile applications to apply on the go, but a face-to-face submission is required. The no collateral bargain is imperative, as the lender does not have a physical item or property to auction in case you default on the loan. Typically, lenders have the option to report defaulters to the credit reference bureaus. They can also file a lawsuit against you or hire a collection agency to help them get their money back. As there is no collateral involved, you would not have to worry.
However, the major downside of a loan with no security is the level of the interest rate. For example, personal loans tend to have higher interest rates than secured loans.
Personal loans come in a fixed amount, which can be low to some, depending on what the individual seeks in financial need. Mostly, the loan amount will depend on your income, other debts, credit score or history, and the lender’s decisions. The higher your income and credit score, the higher the amount you can borrow.
Fees and interests
As hinted earlier on, personal loans tend to have a higher interest rate due to the absence of security collateral. Besides, the interest rates do not change for the entire duration of the loan. Nonetheless, it is not rare to find specific personal loans with variable interest rates. The disadvantage of such an arrangement of variable interest rates is in the planning. You may have a limited chance of budgeting for your loan repayment due. This is because as the rates change, so does your monthly payments.
On additional fees, some lenders require origination and closing fees. This, in turn, increases the amount you pay on loan.
Different personal loans have their distinct repayment periods. Some go up to five years while others can be shorter with up to two years. The shorter the tenure of your loan, the higher the interest rate per month. Therefore, you need to analyze whether you want to pay higher interest rates per month or lower. This will depend entirely on how much money you can earn every month.
To avoid straining too much, you can pick an extended repayment period, which will guarantee lower interest rates every month. When you are finally ready to take on a personal loan, feel free to consult a professional and certified Singapore fast cash loan lender for your financial needs.