Are you a Singaporean looking for a loan to fill a gap in your finances? This can be a good idea, but only if you take the right loan. Many are the people who have taken loans but ended up in deeper financial trouble. This post will highlight some of the mistakes that you should avoid altogether when taking a loan in Singapore.
Taking a Loan From Loan Sharks
Perhaps the biggest mistake you can make when taking a loan is borrowing from loan sharks. These are unlicensed moneylenders in Singapore, and they are known for their high-interest rates and harassing tactics when asking people to repay the borrowed amount. The best way to avoid these loan sharks is to check with the Singapore authority for the list of registered lenders and only borrow from those allowed to operate in the jurisdiction.
Again, you can be able to identify them because they insist that everything is done online. When you are taking a loan, a licensed moneylender will always insist that you visit the offices when signing the loan. Therefore, if you find a lender insisting that even the signing of the agreement is done online, such as on WhatsApp or other platforms, it is time to walk away. You might be getting directly into a trap!
Taking a Loan without Reviewing the Details
For some people, especially when they have an urgent need for cash, be it for an emergency or need to buy a new item they have bumped into downtown, rarely do they review the terms and conditions of the loans they get in Singapore. They simply click take more, especially on their credit cards, and only realize later that the interest rates of the credit were too high.
When taking a loan, you need to appreciate that the cash will be repaid. Therefore, only the loan that comes with good terms and conditions should be considered. For example, if a credit card loan comes with a very high-interest rate, why not consider a personal loan, which is offered at a lower rate?
Not Factoring Their Credit Scores
In Singapore, anything about finances, especially when it comes to borrowing, revolves around your credit score. Therefore, failing to think about your score is a big mistake because you are likely to get a loan with very high-interest rates, whereas it could have been possible to do it at a lower rate.
Before filling out the application for a loan, whether a renovation loan or personal loan, you should do the following:
- Get your credit report and confirm that everything is okay. If it has errors, you need to have them corrected immediately so that the report is a true reflection of your creditworthiness.
- If your credit score is very poor, take personal initiatives to try and improve it. For example, you might want to consider repaying current debts first to improve your credit score.
These are only a few of the common mistakes that people make when taking loans in Singapore. Therefore, you better be smart and stay on top of everything when applying for a loan. One way of getting it right when applying for a loan in Singapore is working with top lender comparison sites.
Since they only work with registered lenders, you are sure of avoiding loan sharks and easily identifying the loan with the best condition. One example of a trusted site is Lendela. To use their service, you only need to visit their site and make a short application to get offers from lenders.
Then, pick the preferred option. Remember that once your loan in Singapore is approved, you should stick with the repayment agreement until it is completed.
Interesting Related Article: “What is a loan shark?“