When it comes to money lenders, personal loans, banks, and other types of borrowing, there are quite a few myths out there. SO, how do you know which are right, when to borrow, if you should take out money with a money lender? If you are even considering it, you will find there are some ways which are better than others for you to borrow. But, there are some misconceptions you have to learn are simply not true. So, let’s take a look at these, and what you do actually have to know as it relates to borrowing, in order to ensure you are going to make the right choices when you do have to take out a loan, with a lender, for any reason.
Why do I need a loan?
Even if you are financially adequate and pay things on time, it is good to borrow. From making a big purchase, to building credit, if you pay it back on time, and are paying your lender within the given parameters, you are going to find it is a good way to build credit and to build up your financial history.
Emergency: it won’t happen to me – Yes, it will; and, the worst thing is you can’t plan for it. So a loan is a good route to go if you do not have emergency funds set aside and need cash so you can care for your family.
Market won’t change – If prices increase, rent goes up, how do you deal with these changes? Both long and short term changes occur, so you have to plan accordingly when they unfold.
I earn enough – This might be true; but, again, there are reasons to borrow. Even if just to build up your credit worthiness, a loan can help you do this.
Land – Yes, this is a great resource to own. Not only for use, but as an investment; and , as it is costly, a loan is a good way to help you pay for it.
I don’t need the loan – So, you are at home and don’t pay rent. If nothing more, you can take out a loan for cash flow and to help you save accordingly. You’ll be thankful when you are out of their home and need to pay your bills.
Loans vary – Yes; many people aren’t aware of securities, personal loans, money loans, payday, etc. There is more than one type and each differs, you should know what each offers.
Secured loans – What is it? Basically you are securing it with an asset (car, home, etc). Depending on why you need a loan and amount you are borrowing, some lenders will require a security to be put down when you borrow.
Good and bad: Secured – The good is obvious, you can borrow more. But, the bad is if you do not pay or are late on payments, your security (the car, the home, etc.) are liens. So, you don’t regain possession until the loan is repaid in full.
Unsecured – Obviously this is the opposite of secured. You are not required to put down a security in order to borrow. But the trade off is usually a higher interest rate and shorter period for you to repay the loan you are taking out.
Unsecured: Good and bad – With unsecured loan, the good is not having to put down anything in order for you to borrow. On the flip side, your bill is higher, you are going to pay more interest, and you will have to repay the loan in full, in a shorter period of time than is the case with the secured loan in most cases.
Money lenders – There are some which aren’t licensed; if you are borrowing in Singapore, this is the last thing you want to get into. If a money lender is not licensed, do not borrow with them. You want to know you are doing business with a viable, reputable company; for such reasons, it is best to go through a licensed, not un-licensed lender when you do borrow.
How do I know? – Licensed money lenders are listed with Singapore governmental agencies. Also, most will have some notification. If they are not licensed, you are also going to find it quite obvious to see they are not licensed as lenders. Do your research and shop around before you borrow.
What do I look for? – Apart from a lender being licensed, make sure they are reputable. Make sure they offer various loan terms. Look for those which have a great reputation, reviews, and guarantee the loans they are going to offer. There are plenty out there, it is up to you do the research before you do borrow with them.
Reliability – A lender should have numbers on their site. They should be backed by the government and banking industry. They should also fully list out all terms, and provide you any information you require. If they do not, then you should not borrow with them. You have to know what you are doing and who you are dealing with, so do your research.
How about rates? – You have to shop; although most money lenders have similar rates, this doesn’t mean they are equal. So you have to take your time to compare, and see which ones are offering the best terms/rates, and repayment options. When you compare, you will find the best rate.
I’m still confused – You are not alone! There is plenty to know and plenty of terms to weed through. So, compare and shop around. This is the best way to know what you are getting into, and to ensure you do find the terms you can actually keep up with as it relates to paying a loan.
There are many misconceptions around money lenders and the financial sector as a whole in Singapore. But, if you do your research and if you shop around, you do not have to deal with unlicensed lenders. Make sure you know what you are doing, what you are signing, and who you are dealing with, before you do choose to take out a money loan in Singapore.