Nothing beats the relief of finally getting the long-awaited “Congratulations!” email from your money lender, saying your request for a loan has been approved! First-time borrowers often do not have a 100% approval rate in terms of loans, so getting your first loan is a big deal.
Before you start putting your money to their intended purpose, take a deep breath first. Adrenaline may be flowing through you, but it is essential to maintain a level head and understand some stuff that you may not know about loans.
Interest Rates: More Than Just a Number
Ordering a takeout is likely a thing we can do even with our eyes closed. Borrowing money, on the other hand, is not. Loans almost always come with interest rates, which usually depends on how high your credit score is, how much you earn monthly and the total amount you are asking. It is not rare for first-time borrowers to overlook this number, so make sure not to make the same mistake and be able to distinguish between “effective interest rate” and “advertised rate.”
Hidden Fees: The Fine Print Matters Lah!
We Singaporeans love a good deal, but remember those “terms and conditions” nobody ever reads? Well, with loans, they’re not just there for decoration. Processing fees, late payment charges, and early repayment penalties – these hidden costs can sneak up on you faster than you can say “Shiok!” So, put on your detective hat and scrutinize the loan agreement before you commit.
Money Lenders vs. Banks: Know the Difference
Need cash urgently? You might be tempted to go with the first lender you see. But hold your horses! In Singapore, you can go to a bank or a money lender. While both offer loans, they have different rules and interest rates. Banks usually offer lower rates but have stricter requirements. Licensed money lenders can be a lifesaver in a pinch, but their interest rates tend to be higher. Do your homework and choose the option that suits your needs and financial situation best.
Repayment Plans: Don’t Play Catch-Up!
So you’ve got the loan – time to splurge, right? Hold on! While treating yourself is important, so is making your loan repayments on time. Remember that late payments can lead to extra charges and even hurt your credit score. Yikes! Most lenders in Singapore offer flexible repayment options, so explore your choices and find a plan that fits your budget like a glove.
Budgeting: Your New Best Friend
Remember that “money doesn’t grow on trees” saying our parents drilled into us? Well, it’s true, especially when you have a loan. Taking on a loan means incorporating repayments into your monthly budget. Track your spending, cut back on unnecessary expenses (goodbye daily bubble tea!), and create a realistic budget that works for you. Think of it as a financial diet for a healthier financial future!
Communication is Key: Don’t Ghost Your Lender!
Life happens. Sometimes, unforeseen circumstances can make it difficult to meet your repayment obligations. But instead of panicking or – worse – avoiding your lender, talk to them! They might be able to offer solutions like temporary relief measures or adjusted repayment plans. Remember, open communication can often prevent bigger problems down the road.
Conclusion
Getting your first loan is a significant step in your financial journey. By understanding these essential aspects, you can navigate the world of borrowing responsibly and ensure a smoother, financially-sound experience. And hey, maybe with some savvy planning and timely repayments, you can treat yourself to that extra plate of chicken rice after all.
