A personal loan is unsecured money provided by the financial institution, which means there is no bond between the bank and the customer. For example: If the customer is unable to repay the loan amount on time, then the bank cannot seize the belongings of the loan holder, which often is seen in the case of home loans, vehicle loans, gold loans, etc.
A personal loan can be taken for any purpose; here are a few things to consider when getting a personal loan in Singapore.
- Put your money for good use: You have planned for a trip that went on hold due to the pandemic, and now when things are normalizing, you schedule an immediate trip and utilizing the fund from the loan amount for the trip is an unnecessary expense which creates nothing but the burden on the head while repaying the loan to the bank. Instead, utilize the money to pay off the credit card debt, approximately 22% to 25% per annum. Taking a personal loan at 7% to 9% is still a wise decision to make. It can not only save you from repayment stress but also helps to maintain a good credit score. Visit Crawfort Finance.
- Interest Rate: The interest rate is something that needs to be kept in mind while getting a personal loan so that the monthly installment can be calculated, and you are prepared with the monthly payment considering all other expenses in hand along with saving some money for the future use as well. It is advised to consider certain terms like Applied Interest Rate, Effective Interest Rate, Equated Monthly Installment terms which will make it easier to understand the loan agreement.
- Fees and charges: While looking for a personal loan, people have the half-knowledge only about the amount they have applied for and the monthly installment they will be paying for, and when they get the agreement for the amount that has been sanctioned to them with the interest rate applied, they rush to the bank with tons of questions. So it is always recommended to know about the charges and fees about the personal loan of the bank and the rate of interest applied on the loan amount that is being taken, which can also help to negotiate while repaying the money to the bank.
- Limitation of the money you borrow: Banks consider several factors when they receive a loan application like the credit history, relationship with the bank, and one of the most important things is the income of the person. After a thorough check about all these factors, the application is further processed to the concerned team for verification. It is vital to understand the amount borrowed from the bank. For example, banks pay the loan amount up to 5 times the monthly income of a person but are we capable of repaying the amount to the bank. On the other hand, some banks go up to 8 to 10 times the loan to the customer, and to avail of those loans, the monthly income brackets need to be more.
- Tenure: Nowadays, the borrower decides the total duration of the loan they wish to keep to pay off the entire loan amount to the bank or the financial institutions, which makes it very easy to calculate the monthly payments beforehand and plan the finances accordingly. There is advice to all the people looking to apply for a loan; usually, people often take a loan and keep it a short tenure of 12-15 months to pay the total loan. This, to a certain extent, works. However, in most cases, this can cause a reverse effect on the borrower, which increases the debt and the late fees charges applied on the principal amount.
Conclusion: This question is always haunting a customer; once the loan is applied, how long does it take for the bank to process the loan amount. In most banks, it takes 48 to 72 hours to get the amount, and certain banks take 15-20 minutes to process the loan once the application is approved. These are the few tips that need to be kept in mind while applying for the loan.