Pros and Cons of Taking a Loan in Singapore
At one point in life one has to take a loan be it for car purchase, house purchase, repairs education, travel, to finance a new business or boost an existing one. If you are one of the few who go about their investments and day to day operations without seeking for a loan, my friend! Count yourself lucky.
It isn’t a crime to seek a financial boost through a loan neither does it mean that you are poor. In most cases, you find that majority of citizens are in the middle class trying to stabilize and they cannot do without loans. So, don’t shy off when seeking a financial boost.
There are many outlets where you can access these loan facilities in Singapore. For instance, you can approach Banks, Singapore licensed moneylenders, SACCOS, HDB, Friends or Relatives.
Before you apply for any type of loan, you should have all information pertaining to that loan. Such information includes but not limited to; loan interest rate, maximum and minimum qualifying amount, hidden charges if any, penalties in case of default, and loan tenure. You should also compare the terms offered by different lenders before making the final decision.
Taking a loan in Singapore is not just a walk in the park. Although it comes with a bunch of advantages, it also has its own shortcomings. Below are some of pro and cons of taking a loan in Singapore
There are many types of loans offered by both banks and Singapore licensed money lenders. Some are for a specific purpose such as; mortgage, car loan, education loan, and development loan while others such as personal loans do not have a specific use hence offering flexible spending. A personal loan can be used for anything be it wedding, travel, medical, birthdays, lavish vacation, and so on. With lending institutions, nobody judges you on how you utilized your money unlike money obtained from friends and relatives where you have to account.
Flexible Loan Term
Loan terms differ from one lender to the other and one type of loan to the other. Most institutions offer a minimum loan term of one year and a maximum loan term of 20 years. But this depends on the type of loan. Short term loans are mostly meant for emergencies while the long term loans are mortgages and development loans.
If you’ve not heard of exorbitant interest rates, then you’ve not come across money sharks. Don’t even yearn to know who they are. Instead, count yourself lucky for not coming across one. Any Singapore licensed money lender or banks will always offer some reasonable interest rates as compared to unlicensed lenders because they are regulated by the central bank.
Potential for Negative Listing
It is the responsibility of all registered and licensed lenders to update the performance of any loan held with them. So, in the event of default the client’s credit score is affected negatively which in turn affects the ability to borrow in the future.
Penalties for missed Installments
This is a form of punishment for the breach of contract. It differs from one institution to the other. Some institutions charge a flat fee while others apply a given percentage to the outstanding loan balance.
There are numerous advantages to applying for a loan in Singapore with a licensed lender. The greatest disadvantage only arises when you breach your contract by not honoring your monthly installment. For more insight about Singapore loans follow this link