A lot of people think borrowing money is a sign of weakness, but it can actually be an act of strength. Borrowing money from the right money lender Singapore with the right terms at the right time can help you achieve your goals faster than if you had saved up all that money yourself. Borrowers often find themselves in this situation because they don’t have enough liquid cash on hand to pay for certain expenses or pay off their debt.
If you’re considering borrowing some money, here are 9 things to know before doing so:
Know your credit score
Check your credit score. This is known to be one of the most important steps to take before borrowing money because it will indicate how much cash you can borrow and from whom.
Non-traditional lenders might offer better rates for borrowers with below-average credit scores who might not qualify for a loan through a traditional lender. Lenders like Western Sky, for instance, offer loans that don’t require a credit check–and they’re available to people who other lenders have turned down.
You should also know if you’re eligible to be a guarantor of a loan. This is when someone agrees to take on responsibility for a loan if the borrower defaults. For instance, if you co-sign for someone else’s payday loan, you’ll be held responsible if they don’t pay.
Only borrow what you can afford.
Sometimes, borrowing too much money at once can come back to haunt you in unexpected ways–especially when there are recurring fees and interest rates that keep adding up every month.
Before taking out a car title loan or any other kind of loan, ask yourself: “Is this reasonable?” If not, it’s probably best to start saving or wait until you have enough money to cover your expenses without having to resort to high-interest loans.
Understand the interest rates and fees
When you borrow money, it’s important to understand the interest rates and fees associated with your loan.
Personal loans, for instance, typically come with an APR of 16 to 24%. Some credit cards carry APR rates as high as 29% or more. If you’re not sure what the terms are for your loan, find out before you sign on the dotted line.
There are also late payment penalties, which can include a fee of up to $25 or more. You might want to avoid paying this fee by setting up automatic payments every month through your checking account or PayPal.
Consider what you’re borrowing the money for
It would be ideal if you considered what you’re borrowing the money for before applying for a loan. Some people borrow money to pay off their bills, and others borrow money so they can travel and go on vacation. But some people borrow money so they can do something nice for somebody else. Doing this can feel like an act of love and kindness, and it might provide a sense of peace and happiness too.
Consider how much you can repay monthly.
The amount of money you can repay depends on your income. For example, if you have a good job, you might be able to afford to repay up to $1,000 a month. If you’re new in the workforce and don’t have a high-paying job yet, then going for a smaller loan that will be an easier repayment each month–say, $200 or so–makes sense.
You’ll also want to take into account how much money you have coming in each month after taxes are taken out. This figure is called net pay. It’s the amount of cash left over after paying taxes and other deductions from your paycheck.
If this number isn’t very high, it might not be wise to take out a large payday loan or cash advance because you might not be able to repay it when your next paycheck arrives.
Be wary of predatory lenders.
Some people get taken advantage of by unscrupulous companies who prey on their desperation and willingness to pay whatever price just so they can meet their financial obligations.
Some companies insist that borrowers have a job or can prove they have enough income coming in before they take out payday loans–even if the borrower is receiving disability benefits. If this happens to you, it’s best not to borrow money from these lenders because many reputable lenders don’t do this.
Ensure to read all the fine print before signing anything.
You should always make sure to read all of the fine print before signing anything. Many people think they understand what they’re getting into when they sign an agreement but later find out that they didn’t fully understand all of the terms and conditions.
It’s easy for lenders to hide sneaky fees in the fine print, like being charged excessive late fees if you do happen to be late on your payment date.
Beware of predatory lenders who might say things like “We’ll do anything so you can have some money” or “Just sign here, and everything will be okay.” These are red flags that show how these companies are trying to trick people into borrowing more than they realize.
Look for lenders who will offer flexible repayment options.
Some people might think they can only get a loan with a fixed repayment period, but some lenders will offer flexible repayment options. You might want to look for these lenders so you can have the flexibility of paying your money back over time rather than in one lump sum.
This can be helpful when you’re trying to repay debt with loans that have short-term obligations–for example, if you have a mortgage or car loan that needs to be repaid quickly. This gives you the option of paying small monthly installments without incurring penalties for late payments.
Avoid taking out multiple loans at once
You should avoid taking on too many loans simultaneously because this can make it difficult to manage all your payments and still make ends meet. If you need to take out a loan, wait until your existing loans have been paid off before taking on another one.