The majority of Singaporeans think that taking a loan isn’t a healthy thing, as far as their finances are concerned. There is a belief that loan only interferes with you saving money because of the debts to be paid every month. To them saving a huge portion of your salary is better than having to use a fraction of it for settling debts.
Thus, budgeting can get a bit tricky because of the loan payments you have to make. Even then the question is, whether loans are at all bad and if they serve any purpose at all. That is beside helping you experience a difficult financial life situation.
There are many types of loans in Singapore you may use for different purposes. Different from other types of loans, personal loans are normally of a smaller amount that you can obtain for emergency purposes. Usually, people obtain personal loans for uses like covering an unforeseen expense as their emergency savings aren’t enough.
Although personal loans work much like credit cards, there are, however, different interests and repayment terms, depending on your lender. It is for this reason that you need to have a clear understanding of all the details set in the loan contract. This will be important in ensuring that you adhere fully to the conditions and terms of the licensed moneylender.
When you end up in a tight financial spot in life, a personal loan will be useful for you. But do remember that the loan is not meant for spontaneous and low-priority spending. A personal loan has a bigger function, and below are top reasons as to the use of a personal loan.
Furthering Your Education
There are different reasons as to why people want to further their studies after college. Some of the reasons could be them having a strong desire to learn more about different fields. Others want to have another degree for greater career prospects. While others further their studies for them to get an opportunity for a promotion at work. With these great reasons, you will certainly have an incentive to have an additional degree with regard to a salary increase or a career promotion.
Even then, continuing your education is not exactly cheap to do. It involves a specific budget, which may possibly not be enough for individuals who aren’t earning a lot of money from their job. Luckily, taking a personal loan offers you the opportunity to continue your studies. When you decide to get a personal loan for your studies, you can choose to split the amount into terms. For example, you could consider repaying your loan for a 7 year period. This will help make your monthly instalments a little smaller as well as more affordable.
In most occasions, personal loans that have a longer tenure are generally more appealing to individuals who would like to repay lower fees for each month. However, there is also another option that you can use to shorten the time of the loan if you consider you have extra money available to pay every month. In so doing you will be saving yourself a large amount that you would have paid due to the longer tenure.
Managing Your Debts
To help you manage your debts there is an option whereby you to obtain a single loan and use it to repay all your outstanding debts. All that you need to do is get the total amount of the credit card bills you owe and then borrow an amount equal to the total debts. Once approved, you then just pay off your huge debt, then remain with a single loan that you can focus on and is easy to manage.
The main idea about this method is for you to get debt-free as soon as possible, even though you still owe money on the personal loan. On the other hand, you will have one debt to manage instead of many. With one loan you can focus on paying it based on the period you decide on, be it 6 months or longer. Through consolidating your credit, you will slowly be able to work towards being debt-free.
Maybe your only challenge would be in making the monthly loan repayments. Being alert to the exact date when you have to repay your loans is essential to prevent the accumulation of high interest through penalties. Together with that, this can help give you the opportunity to achieve financial freedom and be debt-free sooner.
Improve Your Credit Score
A low credit score can affect your eligibility for a loan when you need it. It could be that you need a home loan you’d wish to take out when you are ready to make a purchase of a home of your own. But this may not be possible if your credit score is rather low. When you are frequently taking credit line on your credit card, it does affect your credit score rather negatively. This is one reason why some Singaporeans find it hard to access a loan when compared to others.
- What To Do About This
The suggestion here is for you to obtain a loan, however, you make sure you repay it on time. Starting with a smaller loan is better, as this will let you make regular payments based on the period set by your moneylender or a bank. By making regular monthly instalments will also prevent massive fees because of late payment penalties. Though at the same time it will be helping you keep track of your monthly budget and expenses.
Ensure you only get a loan that you know you can repay with ease. Try and limit your loan amount to a few hundred to begin, and then ensure you pay it off in good time. This will help you in building your credit record over time, which will make you appealing to many financial institutions. Before long, the credit rating will have improved, together with your financial well-being. All things considered, a personal loan provides you with a win-win situation.