A personal loan helps you when you are in urgent need of some extra cash. The money you get from this loan can be used for any purpose and you do not have to provide any specific reason to your bank for borrowing this money. It could be used for many purposes: like buying your wedding ring or renovating your house. It could be also be used to pay off other debts.
As in the case of every other loan, this loan also requires you to repay the money with the rate of interest within a specific period of time. The rate of interest is decided by the bank based on a number of factors such as the amount borrowed, the time period, credit score, market rate, etc.
These loans are provided by many banks in Singapore at competitive interest rates. Some of these banks are DBS bank, HSBC Bank, Standard Chartered Bank, POSB Bank, etc.
Personal loans are unsecured loans, which means that you do not need to provide collateral to get one. This is one of the reasons why the interest rate on these loans are higher compared to those of secured loans. Banks pay a lot of importance to credit reports and scores when it comes to issuing personal loans, as it assures them of the creditworthiness of their customers.
In order to get a lower rate of interest, a person needs to maintain a very good credit score. People with an average score will still be able to find offers but there are very few options available for individuals with low scores. There are a few lenders who will provide loans to people with lower scores, but these loans usually have a very high rate of interest. People with bad credit can get lower interest either by getting a cosigner or by providing collateral security.
As credit score plays such an important role in your loan application process, you should ensure that you have a good score before applying for a personal loan. In order to maintain a good score, you should pay off all your debts on time and check your report regularly. If you find any mistakes in your report, you should get it rectified before applying for the loan.
When you apply for a personal loan, your bank will ask you to submit certain documents. Make sure that you check all the documents before submitting as any mistake can lead to the rejection of your loan application.
The documents that are commonly required by banks are your identification proof, address proof and income proof, among others. Along with this, you might also have to provide other details related to yourself and your employer.
Apart from this, you will have to specify the amount of loan you wish to take and the tenure within which you will repay it. It is advisable to repay your loans in a shorter period of time as it helps save money.
Apart from having a good credit score as discussed above, follow the below steps to get a lower rate of interest on your personal loan -
These are just a few simple steps, following which can benefit you a lot when you apply for a personal loan.
Getting a personal loan is easy, but one should follow certain tips in order to prevent any issues in the future. Below are a few such tips –
In conclusion, a personal loan can prove to be invaluable if you are in need of some extra cash for a short period of time, but be sure of whether you do really need the loan before you opt for it, because at the end of the day, it is still a liability. Once the bank releases the money, you will have to repay it with interest.