Personal loans are a type of loan that are repaid in installments. That means a borrower can borrow a fixed amount of money and repay it with interest in monthly installments over the duration of the loan. Once the borrower has paid the loan in full, his account is eventually closed. If they need additional money, they must apply for a new loan. Most people are constantly searching the internet on personal loan in Singapore. Many customers apply for personal loans and use the proceeds to pay off their credit cards. This comes with several benefits.
First, you will be having only a single monthly payment and you will discover that the interest of your loan is lower than the average interest of all your cards. Obviously, in case your credit is good enough to qualify you for a zero percent balance rate, you would better use that card.
Student loans too normally come with relatively higher interest rates; thus, you might find that repaying them with personal loan saves you money. In addition, you may need to pay for a substantial purchase or event, but you lack enough money on hand to use. Hence, you will finally resolve to use a personal loan to complete your purchase.
What you should know about personal loan
It is easy and convenient
Your personal loan amount relies on your suitability, credit score and income level. As a guideline, the higher the credit score and income, the more you can borrow. Though a few banks have a limit on the amount of money an individual can borrow via personal loan but most of the time the limit is sufficient to generate adequate capital for emergencies and any other situation that may arise requiring you to liquidate your assets.
Lenders may charge some fee for the loan
APR (annual percentage rate) and interest rates are not often the same. The interest rate is basically the actual cost of borrowing the loan excluding fees, while the APR is the borrowing cost plus extra fees the lender charges. Lenders are required to disclose the APR, which is the number consumers can use to make comparison on loans. Ensure that you check out your APR and not just the interest rate before taking a loan with a lender.
Potential risk on your personal loan
Unlike the credit card, which allows you to pay off over under-determined duration, a personal loan has to be paid off in a fixed amount of time. This can imply that you will be paying off the debt quicker, but it can also result in problems if the loan is not paid off within the term of the loan. Since the loan is not secured by any property, if you default in making the payments the lender can sue you in court. Moreover, making early payments may result in additional fees.