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.