What are the reasons you can take a personal loan for?

You can apply for a personal loan for almost any personal financial need of yours. You don’t have to disclose the purpose of the loan to a Money Lender. There are so many situations in which a personal loan can help you.

Why a personal loan is an unsecured loan?

A personal loan is issued and supported only by the creditworthiness of an individual and doesn’t include any type of collateral for security. In a secured loan, the lender has the power to auction collateral if the borrower defaults the loan but in the case of an unsecured loan, it is not possible to auction anything. That is why the interest rate of a personal loan is higher as compared to a home or car loan because higher risk means higher interest rates.

Can you save money on interest rates of a personal loan?

There are some factors that affect interest rates applied to a personal loan. The two most important factors that affect your eligibility for lower interest rates on a personal loan is your credit history and income level.

Because a personal loan solely supported only by the creditworthiness, it is very important that you must have a good credit score (which is close to 900) before you apply for a personal loan. Other key factors that can help you in decreasing interest rates are your income level and liabilities (unpaid loans, outstanding credit card dues, current EMIs, etc.). The higher income level and lower liabilities can increase your chances of getting a higher amount of loan at a lower interest rate.

There are also some lenders that allow payment methods like part payment and prepayment which result in a huge decrease in the amount of interest you pay. For more information and details search Personal Loan Singapore on Google.

Things you should keep in mind while taking a personal loan

Here are a few things you should keep in mind while taking a personal loan:

Always compare interest rates and offers from different lenders before you set for one.
Do not go for the long term tenure; always try to keep the tenure period as short as possible.
Keep an eye on the processing fees and other charges; there are also some hidden charges sometimes.
Before you apply for a personal loan, it is better to check your credit score from a trusted source.