When your funds are running low, the idea of getting an instant cash loan in Singapore will be tempting. However, before you fill out that loan application form and submit your application, it is important that you try to find out if there are any hidden costs associated with getting the loan. One such hidden cost that you need to be worried about and should ask the lender is the upfront fee, also termed as the origination fee.
Most lenders will avoid sharing information about the upfront fee until reaching the instant loan approval stage. This is the time the borrower gets both good as well as bad news. The good news comes in the form of approval while the bad news comes as paying the origination fee or upfront fee before taking out the amount loaned. Most of the borrowers end up paying the upfront fee since they are left with no other option.
A lot of the times, the upfront fee is linked to the annual percentage rate (APR) and therefore you won’t be able to find it in the interest rate section. Payday or instant loan companies charge anywhere from 1% to 6% of the total loaned amount on this head. The percentage of the fee charged in this head also depends on the borrower’s credit scoring, amount of money borrowed, and the duration of the loan.
Although it may seem like a small percentage, at a time when every penny counts, it may seem like a huge deduction. If you have applied for an instant loan and you are worried about the upfront personal loan fee, here is what you can do to bring it down:
Improve your Credit Score
If you have a bad or not so good credit score, your lender will treat you as a high-risk borrower and to cover this risk, he may charge you a heavy origination fee. The best way to minimise this cost or avoid paying for it is to improve your credit score. There are many ways you can improve your credit score, but you will have to wait for a long time before it is reflected in your credit history report.
Lower the Payback Period
The amount of upfront fee your lender will charge on the loaned amount also depends on the duration of the loan. If you are thinking about paying it back within a shorter period of time, your lender may bring the origination cost down. However, you may end paying more in this way than if you were planning to pay off the loan amount after a long time.
Lower the Loaned Amount
Another thing that can bring down the upfront fee is the amount of money loaned to you. The lower the amount loaned, the lesser the upfront fee and vice versa.
Don’t get stuck with one instant loan company, look around for others and get rates from them. You may get a better deal somewhere else with zero origination fee.