When you’re looking for a personal loan, research on interest rates takes up most of your time. However, there are so many factors that are just as important to consider. For example, some lenders offer lower interest rates but charge higher fees. Also, some lenders only offer loans to certain people or in certain amounts.
For a deeper understanding of personal loans, we have put together a very brief guide to help you make an informed decision about when you get a personal loan. These are the top 3 facts you should know about your personal loan and personal loans Singapore companies.
1) Plan your expenditure before getting a personal loan
Before you apply for a personal loan from a personal loans Singapore company, first decide what you will spend on when you get the money. A good way to start is by listing your short-term and long-term goals. Then, go through the pros and cons of splurging your loan money on it, ranking the list according to importance. Remove expenditures that you can do without. For example, if one of your goals is to buy a new car, perhaps you should consider buying secondhand instead of a brand new Tesla.
Once you have done this, you can use the list as a guide on how to spend your loan wisely. So if you have pre-existing medical expenses or financial emergencies, then these may be expenses that you must pay back first. While using personal loan funds to make home improvements should be less urgent.
2) Banks and personal loans Singapore companies will decide your loan limit
First of all, banks will consider several factors when deciding on a borrowing limit for your personal loan, including your relationship with them, your credit history, and more importantly your monthly income.
Your relationship with the bank or personal loans Singapore company is important because they want to be sure that you’re a good customer who will pay back what you borrow. If you have done business with them in the past, then you’ll have an easier time getting approved for a loan. The same is true for people who have worked at banks or other money-related jobs for a long time or are related to someone working in the company.
Your credit history also matters because banks want to know how well you’ve been able to pay off loans in the past. If you’ve taken out many loans and paid them back on time, then there’s a good chance that you’ll be able to afford this one as well. However, if it’s been difficult for you to keep up with payments in the past then it may be harder to get approved for more money right now especially if there are other bills due soon too like rent or car payments etc.
In addition, if you earn a decent amount of money annually, your loan limit may be up to 3-4 times your monthly income. But if someone is earning less than very little annually, they could be limited to only 2 times their monthly income. So you may have huge plans with the amount of money you plan to loan, the problem is that you might not even get the amount you wished for. It’s best to do your research and check with banks and personal loans Singapore companies first before agreeing to a contract.