Loans are practical tools that help people quickly achieve their goals and improve their quality of life. For instance, loans for educational purposes, mortgages, and car loans add value to the modern individual. Moreover, loans offer a helping hand when unforeseen circumstances require funds to be resolved, such as accidents or car repairs.
In short, taking out a loan can be substantially beneficial if done right. As such, it is essential to ask yourself several key questions before sending in your application to a licensed money lender.
1. Do you really need to get a loan?
Getting a personal loan for non-essential reasons is not recommended. Taking out a loan means you are committed to paying back the money you owe plus the interest you have agreed to in the contract. That interest is something you can put towards your savings or spend on more important things. Hence, using a loan for non-essential items like a vacation or a new phone with a loan tenure of a year would mean paying a monthly interest of a maximum of 4%, which amounts to a substantial sum in total.
2. Do you have the means to repay the loan on time?
As a rule of thumb, always have a debt repayment plan in mind well before filling out a loan application form. You can do this by simply preparing your monthly budget and list of expenses, along with your current debts and reserved savings. Work out and see if the remainder is enough to repay your monthly dues; otherwise, you will likely have trouble making repayments. In that case, it may be best to reduce your desired loan amount, negotiate with the moneylending agency on your loan’s interest rate, or anything else that can lower the payment terms that best suit your circumstances.
3. Where will you apply for a loan?
When planning to take out a loan, always make sure that the moneylending agency you apply to is registered, reliable, and reputable. Getting a loan from loan sharks and other untrustworthy entities could potentially drain your finances instead due to various factors, such as higher interest rates. As such, acquaint yourself with the signs that distinguish between legal and illegal moneylenders to ensure that loan terms are fair and that you will be protected by the law in case something goes wrong.
4. Do you have a plan for when you cannot pay on time?
Life is unpredictable, so even if you are sure that you can pay off your monthly dues regularly, it’s crucial to prepare for the unexpected otherwise. Late payments or failure to fully repay your loan can negatively affect your credit score, making it more challenging to get approved for another loan in the future.
Therefore, it is best to expect the unexpected and develop a plan that allows you to get the finances you need to pay off your loan even when you are suddenly short on cash. For instance, you could reserve a few high-value items that you can sell to pay off additional expenses instead of taking the money out on your monthly loan payment reserves.
Getting a personal loan or any loan is a big responsibility that one should always prepare for, no matter what. Having a proper repayment plan that includes solutions for unexpected financial shortages helps you become confident that you can fully repay your debt and fulfil your promise to your moneylender.
If you are looking to apply for a personal loan today, do not hesitate to contact us here at Orange Credit. As one of Singapore’s approved debt consolidation companies, we are the licensed moneylender you can trust to provide you with the loans you need, be it simple personal loans, business loans, or debt consolidation loans. Give us a call today at 6748 2320 to learn more about our services.