The world is in continuous change and maybe it is hard to keep up, especially when it is about managing your personal finances when unexpected expenses may occur. Whether it is about a medical bill, the renovation of the house or even buying a house, a lot of people deal with financial challenges and loses control sometimes. But there is a quick and efficient solution to help you with all of this mentioned above, namely a personal loan which is an ideal option for getting the necessary funds. The personal loan in Singapore is a popular method through which people deal with financial challenges, but the question is which the personal loan interest rates are? Keep on reading to find out the main aspects about this subject.
What Is a Personal Loan?
Even if you are from Singapore or not, a personal loan is basically an amount of money that you borrow from a reliable source to use for different purposes. For example, if you want to renovate your house but you do not have quite the financial facilities for that or if you want to have your dream wedding, a personal loan might be the answer for you. You can get personal loans from credit unions, online lenders or banks. And usually when you repay the money you borrow you also pay personal interest rates too. There are some cases when the lenders can charge fees for their loans.
Experian also mentions ‘A personal loan is a type of loan that allows flexible borrowing, short- to moderate-term repayment options and relatively quick funding. Whether you're trying to consolidate high-interest debt, start a business or pay an expensive medical bill, a personal loan can help you accomplish your goal.’
What Can You Use Personal Loans for?
There are a lot of reasons why you can use personal loans but the most common uses include:
- A medical bill
- House renovation or repairs
- Divorce costs
- Emergency expenses
- Starting a new business or for the expenses to maintain a small one
- Moving expenses
- Wedding expenses
- Big purchases for a house such as furniture
- Funeral costs
But the reason why you want to get personal loans is not necessarily an essential spending, it can also be for regular shopping, a vacation or a city break and so on. Of course, it is recommended to try your hardest and save up some money instead of borrowing them for unnecessary spending because you will have to repay a bigger amount than the one you borrowed because of the interest rates. Also, it is quite important to know that some lenders might have some restriction on what to buy with the borrowed money or how you use them. For example, some may not borrow money for party expenses.
Therefore, even though a personal loan is common in Singapore, you have to be informed about what it is, how it works and what the requirements of the lender are.
What Are the Personal Loan Interest Rates?
When talking about a loan, personal loan interest rates represent the percentage of how much a lender charges for the amount of money you borrowed.
Investopedia mentions ‘The interest rate is the percentage of interest relative to the principal. It is either what lenders charge borrowers or what is earned from deposit accounts. The interest rate on a loan is typically noted on an annual basis and is expressed as an annual percentage rate (APR). An interest rate can also apply to a savings account or a certificate of deposit (CD). In this case, a bank or credit union pays a percentage of the funds deposited to the account holder. Annual percentage yield (APY) refers to the interest earned on these deposit accounts.’
To make things easier, the personal loan interest rates are basically a fee that you have to pay for the fact that you keep another person's money for your personal needs. And so does the bank, if you have an economy deposit opened then you will also get a certain percentage for letting the lender keep your money and use them in professional purposes.
Who Is Eligible for Personal Loans in Singapore?
First and foremost, all of these requirements are for fixed salary employees. If you are not a fixed salary employee and do not have a regular source of income, then the personal loans are not going to be for you. But if you are, here are the next requirements:
- You must have to be a Singapore permanent resident or a citizen
- You must be above the age of 21
- Your credit score must be good
- You must have a full-time or part-time employment status
If you have all of the above, the last thing you have to do is to get your required documents ready. You will need your identity proof, a NRIC (National Registration Identity Card) or a passport with an income proof such as a bank statement, a computerized pay slip or a CPF (Central Provident Fund). Further you need a residency proof like a household bill. And last but not least, if you are a new employee and worked less than six months you will need an employment contract. In some cases additional documents might be required, it depends on the lender you chose or the situation you are in.
Conclusion
In conclusion, if you deal with financial challenges personal loans might be the best option for you but just choose wisely because a loan is not a game. After you borrow an amount of money you will have to pay it back more because there are personal loan interest rates which you need to take into account before you make a choice. Everyone goes through challenges from time to time and has emergency expenses or just does not have the facility to pay for certain needs, but you still can solve this problem in an easy and quick way. But before you start searching for a proper lender you should be aware of the requirements and to make sure that you are eligible for a loan.