Important Factors to Consider Before Getting a Personal Loan
Are you planning on having a personal loan? With all the available personal loan in Singapore, there are a lot of options to let you choose from but how do you know which personal loan give you the best options? So, here are 5 important factors to take into consideration before you get that personal loan.
The most important factor to look and compare is the interest rate of the loan. With the competitive market, interest rates will vary for different banks or lenders. Therefore, it is important for you to search and compare the different interest rate out there as it will affect the total amount repayable for your loan.
There are two types of personal loan available, unsecured personal loan and secured loan. The two different personal loans will affect the personal loan interest rate. The interest rate for unsecured personal loan will be higher than secured loan as there is a higher risk for the lender when there is no asset security. Therefore, it would be good to take into consideration the 2 different types of personal loan available when comparing the interest rate.
Also check the type of interest rate the loan has, is it a fixed or variable interest rate? This would affect the amount of interest you have to pay back, therefore it would be good to take into consideration on the type of interest rate you would like to have for your personal loan.
Flexibility of the Repayment
Always find out about the repayment flexibility of your personal loan. Does your loan allows you to return more than the monthly installment amount? Can you repay the loan amount earlier than the loan duration? Is there early repayment fee which you will be charged when you pay off your loan early?
It is always good to find out whether there is early repayment fee for your loan as you would not want to be in a situation where clearing your loan earlier cost you to pay a higher total amount repayable compared to when you pay regular repayment.
Fees and Charges
It is always good to ask if there are other fees like application fees, payment fees etc. when enquiry about a loan. The fees and charges of your personal loan would make a huge difference to the overall cost. Therefore, it would be good to know the fees and charges there are for the loan so you would be able to compare the total amount you would need to pay with other available personal loans and you would not get a shock from the high hidden fees and charges after getting the loan.
You should always consider the duration of the personal loan you want to take. It is not always better to have a longer loan term as the amount of interest you had to pay back would be much more compared to getting a shorter term but the monthly repayment amount would be much lesser if you take a longer loan term.
Always take into account whether it is better for you to have a longer or shorter loan term. You would not want all your salary to be used to repay all your loan to get a lower total interest.
Find the total amount repayable, not the annual percentage rate
When comparing the different personal loans available, it is wiser to compare by the total amount you have to pay (loan amount, interest rates, fees, charges and etc.) rather than the annual percentage rate as the annual percentage rate sometimes can be manipulated by the lender, therefore it would be better to use the total amount repayable to find the best personal loan in Singapore.
Here are some questions you can ask your personal lender before you get the loan.
• What is the personal loan interest rate?
• Are there any application or ongoing fees for this personal loan?
• Is the interest rate fixed or variable?
• Can I make extra repayments & will there be a penalty for paying off the personal loan early?
• Are there other fees for the loan?