A Guide to Taking Personal or Cash Loans
Perhaps one of the loans you should avoid is personal or cash loans. They normally have higher interest rates and shorter payment terms. Nevertheless sometimes they can be unavoidable, especially if you need cash as soon as possible. What is important, though, is you can take the time to evaluate your options before you make a choice.
Here is a simple guide you can follow:
1. Compare the offers.
The first thing you need to do is to compare offers from various lenders. What factors do you need to check? There are a number. First you need to know the interest rate. If you are getting more than 25 percent, then you should be wary. You may not be able to afford it. Second, determine the payment terms. How soon should you settle it? Unlike mortgages that can last for more than 20 years, cash or personal loans need to be settled in as short as a few weeks. You need to know when to have an idea if you will be able to raise funds by then to pay off your debt completely.
2. Do not go for too much money.
You may come across payday loan ads that say you will obtain a loan 4 times higher than your salary. That sounds really pleasing, as you can surely utilize the extra money. However, later on it will not prove to be a very good idea. Interest repayments will be very high, and you may end up using the extra money for things you do not really need. Moreover, considering that the loan is so much higher than your salary, you will be struggling to make ends meet.
Just borrow how much you need from the lender. At the very least, settle for at least a month’s worth or two of your salary. You can add a little allowance since there are charges or fees applied to your loan. Some lenders will reduce the amount with your interest repayments.
3. Check the credibility of the lender.
Lenders you are going to choose should be trusted. First the bank should be approved by the Monetary Authority of Singapore. They must have excellent track record, particularly when it comes to cash or personal loans. They should be very open on the charges and fees you have to pay along with the loan. A little research can surely go a long way.
Never, ever deal with loan sharks or ah longs. They are the ones who are not licensed to offer loans to you. But you may not be able to resist them because they offer instant money. Once you do, though, you become more prone to harassment from them. They can be very violent and threaten you. Interest rates are exorbitant, in fact, reaching as much as 40 percent. The interest grows as each day passes, so it is almost impossible to clear your debts with them.
4. Make sure there will be no hidden fees.
Be very careful with regards to hidden fees. A lot of lenders are good at this. They would make you believe you are not paying anything until they come up with scenarios where you are compelled to shell out some cash. Here is an example. You can read ads that say you no longer have to pay for admin fee. Well, it is partly true, but it usually happens only when your application is not accepted. If you qualify for a loan, then you need to pay for it. Some would also charge you by even checking your references or requesting your credit report and CPF standing. You may meet some who will come up with a variety of fees.
If you are unsure on the kinds of charges you need to pay with personal loans, you can always go to experts such as credit counselors. They are knowledgeable with anything about loans.
5. Determine the method of receiving money.
How do you receive your cash loans? Do you receive it immediately? Is the check sent to your mailbox? Or does the lender automatically credit the amount to your bank account? Of the three the most ideal will be the last one. First, you do not have to wait for checks to be mailed. Worse, they may get intercepted by somebody else. You also do not end up carrying a lot of money. By adding it to your bank account, you will have full control of how you use the personal cash loans.
6. Read the fine print.
Before you sign any document, read the terms and conditions. If something is unclear to you, ask not just the lender but also independent experts.
Cash or personal loans can make or break you. Thus, you need to be very careful in applying for one. Hopefully you will find the above tips helpful in your quest.