6 Personal Loans Myths In Singapore Debunked
In this world, there are three groups of people. The first group is of those that are frightened by all financial products offered. The second group believes that personal loans are much better compared to credit cards. Then the last group is made up of people who know how to maximize loan products as financial tools.
Good for you if you are utilizing each product for your financial well. The loan products are useful financial tools for when needed. However, if you feel as though you fall into one among the first 2 groups. You are encouraged to read on.
Realize that what you thought you know regarding personal loans may not be correct. Keep reading to find out if you believe in personal loan myths. Personal loans and credit cards have often been misunderstood. Often times when it concerns their purposes.
Below listed are six personal loan myths that Singaporeans need to stop believing:
You Always Have To Get More Money Than You Need
Although personal loans will be useful for some specific purposes. It is certainly not advisable for you to borrow more than is required. Consider this carefully: Is it worth it to take an extra S$1,000 to the amount needed.
Of which your moneylender will impose an EIR (effective interest rate ) of 9 percent a year onwards. It is best to weigh the effects of having an extra S$1,000. keep in mind that you will end up paying extra cash for the interest. Yet you do not need the extra amount you have taken.
Personal Loans Will Only Get You in More Debt
Personal loans can only get you in more debt. Only if you have been missing some monthly payments. At the same, you cannot afford to repay them all. This will with time when not managed lead to spiralling debt.
It is advisable even before you request for any personal loan. You take into consideration the amount that you are able to repay each month. Then, work out the loan period it will take you to meet these payments comfortably.
Do not try to reduce your loan period if you are not able to manage the repayments. It is important that as a borrower you keep this in mind. Missed repayments only lead to you incurring late charges. This is something you need to consider avoiding at all cost.
Personal Loans Are Meant For Those Short In Cash
In most instances, this is not the case. Many Singaporeans make use of personal loans for many different reasons. That is other than being short of cash. Actually, many wealthy people make use of personal loans. This makes it possible for them to have hard cash at hand. With this, they are able to use it for many other purposes. This can include making investments.
Another use for personal loans is when you are considering debt consolidation. With this loan option, you will avoid high- rates on credit cash advances. It can also help you avoid unnecessary insurance claims. This is by using a short-term personal loan to do any car repairs needed.
Why Take a Personal Loan And I Already Have Existing Debt
As mentioned earlier, personal loans have proven to be useful. More so when you are thinking about consolidating your debt. When you owe some money on several credit cards. Also, each attracts an interest of 24 percent each year. Then you could consider taking out personal loans to repay all the debts. This loan comes at a much lower rate of interest. This will, in turn, help you save on interest costs.
Before taking out a personal loan. Make sure you always make some comparisons on the loans. This way you will be able to find the loan that has the lowest EIR. ( This is the rate of interest per year including other fees and additional charges).
In so doing, your outstanding debt will be much more manageable. At the same time, it will be more comfortable for you to repay.
You Need To Turn To Moneylenders If You Do Not Make The Minimum Wages
In Singapore, most banking institutions promote a minimum salary of S$30,000 each year. This is even a higher amount for foreigners. This is what borrowers need to meet for applicants to make for personal loans. However, most local banks will offer a personal loan product. For those Singaporeans who have an income of S$20,000 and above each year. One such is the Fixed Repayment loan from OCBC.
Based on this is advisable that you take your time to research. Shop around for the lender that has the lowest rates. One who is ready to accept your requirements. Make sure that the lender offers you a flexible payment plan. You can visit some of the moneylenders in Singapore to find out the rates they charge.
This Loan Type Is Better Compared To Credit Cards
Some Singaporeans believe that personal loans are much better. This is when they are compared to credit cards. The reason for this is the fixed repayments set for each month. Although it is completely up to you as a borrower on how you want to repay the loans. This may not be the cheapest method of borrowing money.
When it comes to credit cards, different from personal loans, they come with a grace period during which you will not be charged interest. This is on the loan amount you will have borrowed. This is provided that you repay your bills on the set date. When used in the right way, you will not have to give a single cent for the credit card interest.
Many Singaporeans do not utilize a personal loan product. The reason being they might be too concerned about the effect of the loan. Even then, there are those who know how to maximize loans as financial tools.
It is possible that some may have the wrong idea regarding using personal loans. Credit cards and personal loans have many times been misunderstood. More so when it comes to their purposes.