A personal loan is perhaps one of the most applied for loans in the financial market today. The reason behind this is perhaps the borrower need not specify for what purpose he or she would use the loan for, unlike if one would apply for a home or car loans. Personal loans in a sense are a form of credit whose purpose is general in nature like purchasing appliances, electronic devices, or to cover vacation costs and/or any other type of expenses that may need to be paid by the borrower.
Unlike the credit card, a personal loan will allow you to use the cash provided by the lender to pay whatever expense is needed to be paid instead of using a credit card to cover the cost. However, like in the credit card, payment for the loan shall be amortized on a monthly basis or in whatever repayment terms the lender and borrower have agreed upon.
You must understand that unlike other type of financial help, personal loan are usually not as flexible as a credit card and usually do not carry additional benefits such as warranties and purchase protection, rewards, travel benefits and other incentives given by other type of loans. What is beneficial with most of the personal loans offered by financial institutions is that the interest rates charged are usually fixed and reasonably low and most of the time is never covered by collateral.
In Singapore, applying and availing for almost all sorts of personal loans is very common among its residents and more often than not used to cover personal expenses or to purchase personal items, gadgets, and appliances. However, lately, Singaporeans have started to discover new ways of using personal loans more constructively. For instance, personal loans are used today to consolidate current debts of an individual. This type of personal loan is usually defined as a debt consolidation loan, usually accomplished by applying for a single type of bank loan or through your credit card company to cover two or more types of debt.
In general, Personal loans are availed to cover any kind of personal expense that cannot be met by the borrower’s current income status. In some instances, borrowers who are at the same time old and reliable clients of particular financial institutions can even get a large amount of personal loan to cover large expenses such as home renovation or even to use the fund as a down payment for a new vehicle. In olden times financial assistance was given by a loan company such as a conventional bank usually refers to this type of financial help as character loan and this is simply because the borrower’s personal character and status are quite well known with the bank or lending company.
The well and richly developed economic situation that exists in Singapore today have allowed the residents to be secured in applying for financial assistance from both public and private financial institutions. A high percentage of individuals and families here earn enough income to allow them to apply for the type of loans to cover purchases of homes and other properties or to use the funds for additional or unexpected expenses. Because seeking financial assistance from lenders in Singapore has become common, various lending institutions other than banks and conventional lending companies have mushroomed in the country.
This situation speaks well of the financial condition of Singapore but like any other well-developed countries, it gave rise to some problems one of which is the presence of unscrupulous lending companies that prey on unsuspecting borrowers. I will try and give you some pointers that will in one way or another tell you the type of lenders you should avoid. However, let me point out that these types of lenders are mostly the unconventional lenders and whose main intentions are to simply lend out money to those in needs.
- First, make sure to avoid unlicensed moneylenders when thinking of applying for even small loans. You may have an easier time applying and having your loan approved from these types of moneylenders but you can bet your life that the interest rate is going to be very high and its repayment options very difficult to comply with. You must understand that a person or entity, whether licensed or not have the right to lend another individual money, but the unlicensed one is not bound by Singaporean laws covering money lending activities. You are therefore a lot safer by borrowing money from licensed lending institutions.
- Second, avoid moneylenders that advertise their services in the form of telemarketing or through SMS marketing. Legal moneylenders in Singapore are never allowed to do this as per instructions of the IPTO rules and privacy acts of the country. Illegal money lender uses these marketing strategies to reach out to clienteles so it would be best to avoid these lenders.
- Third, when applying for a personal loan, avoid moneylenders that claim to have the power to approve your loan and remit the loan amount via bank transfers. Most of these claims are bogus because the moment you have paid the fees and other charges for your loan, in all probability, there will be no cash that will be transferred to any of your bank accounts.
- Finally, avoid money lenders that would require you to disclose personal information over the phone. Some money lenders would trick prospective clients into disclosing personal data when the latter would call for some information relative to applying for a loan. Immediately avoid this type of lenders.