Banks in Singapore have a variety of loans to cater to your needs. For instance, you will get an educational loan, car loan, housing loan, etc. You will notice that most of these loans have a specific purpose behind them. However, a personal loan is one such unsecured loan that can cater to any of your requirements.
You may need a personal loan for the following reasons:
Types of personal loans in Singapore
Personal instalment loan:
In this case, you will receive upfront cash from the lender and you are required to repay the debt on a monthly basis over a period of time. This type of personal loan is used for medical emergencies and weddings.
Credit line refers to revolver credit. This means that money can be drawn and utilised according to your needs. The lender decides on how much money can be borrowed. You will only pay the interest on the amount and time you have utilised the money.
This is a type of loan that allows you to merge multiple loans (from different lenders) into a single loan. Some lenders even offer a grace period of 6-12 months for which no interest is charged. A balance transfer can be effectively used to consolidate your debts.
How does a personal loan work in Singapore?
If you have a good credit score, you can get a personal loan within a week in Singapore. Personal loans are unsecured loans. This means that there is no collateral involved. A personal loan will have a fixed rate of interest along with repayment periods. Most personal loans are also amortized. This means that your monthly instalment will also include your principal and interest charges.
Benefits of taking a personal loan
Fixed interest rates: Unlike credit cards, personal loans have a fixed rate of interest wherein you are required to make regular monthly payments for the said term (depending on the tenure of the personal loan).
Unsecured loans: A personal loan do not require any collateral security and is easily available. However, you will need to utilise your loan responsibly and repay it to the bank. You will need to remember that personal loans are linked to credit scores.
Faster availability: Upon applying for a personal loan today in Singapore, you may get it sanctioned within a week depending on your eligibility and credit score.
The factors below will give you an insight on how you can save money with a personal loan:
Lower the interest rate on your current debt
If you have borrowed money from a lender at a higher interest rate, you can take a personal loan to clear your existing debt. For instance, if you have a loan that has a higher interest rate of 13%, you may take a personal loan (that has a lower interest rate of 6%) and close your existing loan that requires you to pay more. By doing so, you can save the interest charges every month.
Also, personal loans can be paid back in easy monthly repayments at a fixed rate of interest. This will eliminate the burden of paying higher interest rates that you carry with other lenders.
Use a personal loan for your side-business
A business loan usually requires you to have a steady financial track record of 2-3 years. This also requires you to meet certain criteria including business registration for which you may be unprepared. In such scenarios, you can always take a small personal loan to start a side-business such as a blog shop or renting out your video equipment. For example, if you have taken a personal loan of S$2,000 for a tenure of 1 year, your monthly interest may be as low as S$200.
Personal loans to update your skills/education
You can consider taking a personal loan to update your skills and knowledge. If you land a promotion or get a pay hike for your skills, this may add up to thousands of dollars annually.
Consolidate your debts from multiple lenders
Different lenders may have different interest rates. When you have multiple loans that require you to pay higher interests every month, you can opt for a personal loan to assist you with this situation. For example, if you have taken a loan from 5 different lenders, you can take a personal loan from a single source (bank) and clear all your outstanding balances. By consolidating your debts, you can save money and also avoid paying huge interest rates to different lenders.