According to research, 11% of Singaporeans take out personal loans to “cushion themselves or to help their families and friends,” with “covering basic expenses” accounting for around 13% of all personal loan applications. One in ten Singaporeans (10%) takes out a loan for “financing a mortgage,” “buying a car,” or “paying off credit card debt,” which are other common reasons for seeking a personal loan.
Unlike a corporate loan or a mortgage, personal or consumer loans offer a certain amount for personal expenses. Banks in Singapore provide personal loans. Personal loans are also available via virtual banks and private financial institutions, and cryptocurrency loans are a recent development.
In this post, we’ll go over some of the advantages of personal loans in Singapore and explain why, in comparison to other options, you should consider them for the extra money.
No collateral is necessary for personal loans.
Personal loans are unsecured loans. This contrasts mortgages and business loans, also known as secured loans, which call for collateral such as homes, land, or other assets that the lender can repossess in case of default. With personal loans, the bank or financial institutions will only provide the funds and base your interest rate on assessing your credit rating and ability to repay.
The fact that personal loans are unsecured means that if you cannot pay back the interest on a personal loan, none of your assets will be at risk. Consumers may be tempted to take out more loans due to the loan’s convenience and lack of collateral. However, there are some risks involved. If you default, you risk harming your credit score, and the lender may also take legal action against you.
No limitations on how you use your personal loan
One of the best aspects of personal loans is the freedom to spend the money you like once approved. When you obtain a mortgage, you must purchase a home with the money from the loan. On the other hand, personal loans operate differently, and you’re not required to use them to buy a particular asset because you don’t have to.
Instead, you can get a personal loan and use the money for anything you like, like a trip or home repairs. Basically, you can put the funds to any use after the loan has been granted. For instance, unlike a standard vehicle loan, you can use your personal loan to finance furniture instead of an intended car purchase.
Simple and quick application
Gathering a ton of paperwork is the last thing you desire when applying for a personal loan in Singapore. In Singapore, all lenders require in terms of evidence when applying for a personal loan is identification, address, recent pay stubs, and bank statements going back one to three months (depending on the bank). You must show these documents to the bank’s branch offices to apply for a personal loan there. You can quickly make the application in less than 20 minutes.
In Singapore, most banks process personal loans in under 24 hours. The banks will grant your loan immediately after completing the personal loan application form and supplying all the necessary papers. This makes personal loans incredibly practical, particularly if you need money immediately.
Furthermore, the funds are promptly transferred into your account after final approval. However, be aware that certain banks have holiday or weekend closures, which slows down the distribution. The bottom line is that the funds will be credited to your account even faster if you are an established customer of the lending financial institution.
Reduced relative APR compared to credit card loans
Even though credit card loans are quick and simple to obtain, a personal loan is a superior choice because it is less expensive. While personal loans in Singapore might have interest rates as low as 5% per year, credit card interest rates are relatively high. Paying the interest rate on credit cards may not be feasible, which might reach 30% annually. Personal loans are less dangerous and volatile than credit card loans because moneylenders can only charge a certain amount of interest on their products.
There are fewer rigid deadlines for loan repayment.
You can choose from various payment terms from one to five years. The principal and interest rates affect the personal loan’s terms and duration. Some banks even permit a longer tenure of up to ten years. As opposed to other types of repayment, where the loan is dependent on the asset and is less flexible, personal loans are flexible. You can also bargain the tenure conditions with the banks and moneylenders to suit your needs.
Personal loans lighten the financial load.
Here are some ways in which personal loans ease your financial stress. When a personal loan is granted, the money is disbursed in a single lump sum and repaid over time in equal monthly payments. This indicates that the creditors won’t pressure you to make significant payments frequently. But the overall amount due will increase when you wait longer to repay a personal loan. This monthly installment plan is less burdensome than other available loan options.
There are many types of personal loans.
Personal loans are available in various loan packages to accommodate all parties; they are not fixed programs. Personal loan lenders may specialize in anything from student or educational loans to cash loans for home improvements, loans for weddings, quick/urgent loans, and even unsecured car loans when the vehicle itself is not the security.
Furthermore, most financial institutions offer personal loans to professionals working in various fields, including investors, lawyers, doctors, and engineers. Farmers and women also receive plans with low personal loan interest rates due to their social qualities. Acquiring a personal loan without having a company plan or a home is possible.
Although personal loans in Singapore are readily available and offer much-needed flexibility, you should borrow within your means and have a reasonable repayment plan.