Due to rampant fraudulent activities circulating in the financial industry, most lenders are becoming more strict in imposing their policies and procedures when providing loans to consumers. This is to ensure that businesses who offer a type of service through money lending won’t be wiped out due to lender’s failure to make repayment, regardless of intention.
Money borrowing or loans fall into two categories which are called secured and unsecured loans. The former is defined as loans that are protected by an asset or collateral. An example for this is when a person borrows a certain amount of money in a finance company and use his car as a collateral. In an event that he fails to repay what he owes, the lender has the full right to take over the car and relinquish his debt. On the other hand, unsecured loans are the opposite which does not require a collateral to recover in case of default but in lieu of this is the existence of interest rates which are considerably higher.
Borrowing with collateral are usually the best and perhaps the only way if you want to obtain large amounts of money. The reason is simple. Putting a valuable asset on the line is a fairly safe guarantee that you will do everything in your capacity to repay the loan. Moreover, secured type of loans usually has lower interest rates, higher borrowing limits and longer repayment terms. In addition to these advantages in borrowing a secured type of loan, it is an excellent way to work towards building a reputation in your credit score.
Nevertheless, there are existing dangers associated with borrowing money with collateral as well. The most obvious one is losing whatever you set up as collateral in case you fail to make payments on time. That is why you should carefully consider your budget and ability to pay on the loan before you borrow any money. Being a practical thinker is helpful as well, such that if you are finding yourself in a situation where you are struggling to make recurring payments, then stop borrowing money and work hard on getting out of debt.
A payday loan is one of the most controversial form of business because of its nature. Regardless of the regulations that are put in place by the government and financing institutions, how payday lenders operate cause the rise of controversy on the kind of business they offer. Although payday loans may often be beneficial to some, especially those who have the ability to pay it back with ease, it still is something that proves to be disadvantageous at times. Here are a few reasons why payday loans should be avoided:
Living on Salary
When you are living on your salary and unable to save, having additional expenses to your monthly budget will only increase your spending. Try to avoid availing of a payday loan when the reason is having higher expenses versus the cash that is coming in. Payday loans, like any other loan, is best to be availed when you have extra cash that can be used to cover the debt.
Having Existing Debt
When you have existing debt, it is best to avoid getting a payday loan. Unless you are about to close off the existing debt that you have, you need to ensure that you do not get into a payday loan. Payday loans have very high interest rates that can create high expenditure of cash that is unnecessary. Creating additional expenses through a payday loan can cause you to have difficulty in managing your expenses and bring yourself deep into debt.
Existing Available Options
There are instances where it one would encounter challenges in financial obligations. Needing extra cash for unexpected expenses is a common problem that everyone will encounter. But it is necessary to find other means of getting that extra cash rather than availing of a payday loan. Payday loans yield high interest that may become more difficult to pay rather than borrowing from a friend or relative. Always have the payday loan as your last option.
The best personal loan in singapore is commonly offered by banks but may also be offered by financial institutions. When making a personal loan, it is essential to check and scrutinize your lender to ensure a good partnership during the term of the loan period. Getting a personal loan will mean having to pay for the borrowed money for a specific term. This term will cause you to create a relationship with your lender. On the other hand, there are lenders who do not look after the welfare of the borrower. These are the types of lenders you need to avoid.
It is important that when you are looking for a lender, make sure that your lender is registered to grant a personal loan and licenses from governing institutions have been obtained. It is necessary that your lender is legitimate and has been registered to act as a lender. Without proper registration, you may be at risk of putting your information and money with an illegally operating institution and they may be operating outside the proper guidelines.
Ensure That the Lender Has a Physical Address
A lender who is only available online or where the agent requires to meet you other than their physical address should trigger a red flag on your part. Because of the lucrative business of lending, it is quite important to ensure that you are secured with your lender. One sign that you should take note is making sure that the website is secured by identifying a lock sign in the site’s address.
When Your Lender is Pushing You to Act Right Away
When your lender is acting weird and asking you to work double time in submitting the requirements and constantly calls you including off-peak hours should send a signal that there is something wrong. Your lender should act accordingly and should respect your time and action.
When we find ourselves in a situation where cash is needed for large purchases, household repairs, or even debt consolidation, a personal loan may be needed. Personal loans are very useful and can become a solution. But getting a personal loan requires knowing what you are getting into and planning the steps you need to take. Without proper planning on loan management, your solution for situation where you need a fund can work against you. A mismanaged loan can turn into debt that is difficult to manage. Understanding personal loans is the first step to planning how to manage it.
A personal loan is commonly associated as an unsecured debt. There are two types of loan which are secured and unsecured. A secured debt is a kind of loan that requires a collateral while an unsecured loan does not. A personal loan is classified as an unsecured loan. Because of the nature of a personal loan not requiring any security, it is more difficult to get approved and a strict process is implemented in granting a personal loan.
Also, the interest rates for personal loans are much higher than other types of loans which are secured. The high interest rates are means of securing the principal loan amount faster to minimize the risk of loss in case a borrower defaults in continuing to pay for the outstanding balance.
Fixed Interest and Repayment Period
A personal loan has a fixed interest rate during the fixed term of the loan. Interest rates offered by different banks and financing institutions may vary but the application of the rate will be fixed over the life of the loan. A personal loan will also have a fixed term for 12, 24, or 36 months. Longer repayment means higher interest fees paid and shorter repayment means lower interest fees paid.
It is very minimal that a personal loan may have a variable interest and variable term which makes it difficult for the borrower to pay and budget the amortizations.
Okay, now that you have decided that it’s time to buy yourself your own home, you will need to plan properly on getting your mortgage. There are several items that you would need to consider to when you plan on getting a mortgage.
Preparing for a mortgage is necessary as it entails a large obligation that needs to be paid for a long term period. Without proper planning, the mortgage can end up bringing you down by creating a big chunk of debt that will be quite hard to liquidate. Knowing your actions and any contingency plans will definitely help you address any concerns that may come your way during the life of the term. Make sure you look through a few things in getting yourself ready.
Review Your Finances
Like with any other loan, the first thing you would need to do before availing of one is to review your finances. Getting a mortgage is a commitment to a long term obligation. You will need to make sure that you have reviewed your finances and you have a means to pay for the required monthly amortizations. You need to ensure that the monthly amortizations you are taking on can be allocated from the current income that you have.
Have a Plan
Having a plan is necessary when taking on a mortgage. You need to identify the possible changes that may occur relating to your financial status over the next years while your mortgage is active. Anticipating all the possible concerns that may occur in the future is very important. Planning on how to prevent or resolve these concerns will be quite important when the actual need arises.
Create a Debt Management Process
Aside from the established plan, you will need proper debt management to be in place to keep track of your mortgage. This is quite necessary especially if you have several loans under your sleeve. Creating a good debt management process will help you deal with reporting and processing your loan.