There are simply some moments in your life when money can be a little tight. Just when you think you have everything all figured out, some emergency expenses come your way. It could be a medical bill that needs to be paid, a car repair waiting to be taken care of, or a rental payment to be made in a matter of days. No matter what these life’s surprises may be, the whole experience of anticipating for their coming can be very stressful or unsettling on your part. This is why people who find themselves in these situations need to come up with a way to gain an access to extra funds to cover for these urgent expenses. Some people may have already set up their emergency fund, which is enough to give them a peace of mind even when challenging situations hit them in the face. In this case, there is nothing to worry about because all of their expenses can be covered by the amount their have saved in the bank specifically for emergencies. But the problem is with those who do not have sufficient cash in their emergency fund. Moreover, there are individuals without such fund at all. In this case, how can they get over this difficult situation without experiencing stress and anxiety?
This is why it may be worth looking into the possibility of taking out a personal loan. While others may not feel quite comfortable about taking out a loan because the they do not want to make monthly payments, it can actually be a great way to cover your urgent expenses without having to approach your family members and friends for some cash. You can even use the loan not just for your emergency expenses, but also for other purposes whether it is to consolidate debts and add to your depleted budget for your renovation project.
There are also instances when a personal loan is simply designed to help tide you over until the next paycheck comes. You can make use of the loan for your basic needs, which can be consoling when there is not enough money available at the moment. But before you go ahead and take out a loan, here are some things that you may want to think to help you decide if this type of loan is suitable for you or not.
Know the Right Time to Take Out a Loan
Just because you run out of money, this does not mean that you have to hurry and apply for a loan. Perhaps you have been wanting to buy a new -and expensive – high-end cellphone, which you have been eyeing at the store for quite a while now. Does this mean a personal loan is truly necessary to get? The truth is, loans are things you need to pay for eventually. So, if you are only intending to use a loan for your luxuries, then it is best to restrain yourself and not easily give in to the temptation to shop. Or perhaps, you should save money for these expensive items instead of heading to the bank to borrow some money that will fund for these things you have been wanting to buy.
While it is a fact that you can use a personal loan for any possible thing you want to buy, there are more important things to consider before you simply borrow some more money. For the most part, it is not exactly wise to just take a loan out just for the sake of shopping or travelling. There are higher interest rates and some fees included in your loan, which does not make it seem too appealing to be used for mundane things.But this is not to say that a personal loan is only designed for emergencies. Yes, you can rely on a personal loan if you have an urgent expense. But at the same time, you can surely use the loan for your other concerns whether it is to pursue post-graduate education or professional training, or even to consolidate your massive credit card debts. If you have been accumulating so much debts in multiple credit cards, then a personal loan can be used to pay off all of these bills right away. Remember that credit cards accumulate a high interest rate of 24 percent, which makes debt payments even tougher once you have to pay several bills on several credit cards.
On the other hand, if you borrow a sufficient amount of money for your loan, then you can just pay off the debt all at once. Afterwards, you can make smaller payments for your loan every month, which should be more affordable for you. The interest rate is also lower than what you would have paid for on your credit card, which is just from 7 to 15 percent. In the end, it is all worth it to take out a loan instead of let the credit card debt drag on for months or even years.
It is worth noting that the Money Authority Singapore (MAS) has set a limit on all unsecured loans. According to the MAS, the limits for this type of loan will include the following, starting 2019:
By June 1, 2015, debts that are 24 times the monthly income will need to be paid off in 3 months.
By June 1, 2017, debts equivalent to 18 times your income per month is to be settled in 3 months.
On June 1, 2019, debts about 12 times of your income monthly must be paid in full within 3 months.
Know Where You Can Take Out a Loan
Now the next thing you should think about when you have finally decided to take out a loan is to determine where you can get the extra money you need. Generally, licensed moneylender Singapore is not very strict with their requirements, as compared to eligibility standards set by banks. But at the same time, you are more likely to get the cash you need from a money lender if you are already rejected by banks.
In addition to this benefit, you do not have to bother yourself with too much paperwork when you apply for a loan from a licensed moneylender. This is why many people find it appealing to take out a loan from a moneylender in Singapore. But just be aware of the higher interest rate that moneylenders offer. Banks even offer some promos and gifts when you get a loan from them whether these are electronics or cash rebates.
Additional Things to Consider
If you think you are ready for a loan, then you may want to consider a few things to help you get started while minimizing the stress level that may come your way. One of these things is the total debt servicing ratio or the TDSR. This refers to the affordability ratio of your loan, which limits the total cash you can take out as a loan, depending on your monthly income and existing debts.
Aside from the TDSR, it is best that you look into the fees included and charges when you take out a personal loan. There is such a thing as a late payment fee and annual fee, which authorised moneylenders charge borrowers. If you end up paying your loan at a later date than the deadline, then there is an extra 2.5 percent placed on top of your existing interest rate. This is the overdue amount that can make things more difficult for you when it comes to your loan repayment.
So, make it a point to search for the best legal moneylender where you can get some cash out for your needs. You will have to consider the reputation and license of the lender, along with the products and services offered. Then, once you are provided with some cash for your loan, you have to be more disciplined about repaying the money that you owe them. Avoid paying your debts late to prevent extra charges placed on top of your loaned amount. As you follow these tips and advice, you can have a better experience when you take out a personal loan for your financial concerns.