When it comes to advances in Singapore, borrowers have a choice between 2 types of loans. And with a good repayment record, you can access cash advances available. In Singapore, different moneylenders have varying requirements for providing loans. Such requirements can also affect the loan amount a borrower can borrow.
For this reason, while you search for personal loans, you should realise that different money lenders have different deals. Also, be sure to know the kind of loan you need, between a secured loan or an unsecured loan.
So, how can you find the best deal when it comes to secured and unsecured loans?
Secured loans are linked to assets and properties which are considered as collateral for the money borrowed. Thus, when a borrower fails to repay the loan amount, the moneylender can assume ownership and rights to forfeited properties. These will be used for repayment of the amount owed to a lender. Examples of secured loans are car loans and mortgage.
As for unsecured loan they do not need any collateral. This type of debt is given mainly based on the borrower’s income, and spending behaviour. An example of an unsecured loan is credit card loans.
If you opt to get the unsecured loan, getting this loan is easy and the loan amount is made available to you within 24 hours. In addition, unsecured loans require minimal documentation as you are making an application.
Is this different for secured loans? When it comes to the secured loan, the application requirements need to be submitted in person to the lender during the normal loan application process. But, the processing and approval can take several days to be completed. Though sometimes the entire process might run for a few weeks.
When looking at the repayment terms of both loan types, secured loans have longer terms compared to unsecured loans. This is because secured loans are available in much larger amounts. Typically, the short-term loans, ranging from 1 to 5 years.
Such a loan is often used by borrowers when you are considering making small purchases such as gadgets, appliances, computers, etc. Unsecured loans are nonetheless less flexible when compared to secured loans. Secured loans normally run for 25 – 30 years and are usually used for home loans and real estate loans.
Another thing that borrowers need to find out is the rates of interest charged. For the unsecured loans, the interest rates charged are normally higher compared to those on a secured loan.
Why is this so? The reason behind the interests is that licensed moneylenders will be taking a major risk as they offer this loan type.
As for the secured loan type, they come with much lesser interest rates because this loan is covered using the collateral presented which acts as security for the personal loan you are taking out.
As you consider getting a loan, consider your credit score. With this type of loan, a poor score will affect your accessing the personal loan. Potential lenders will question your capability to repay and might decline your application. Also when you don’t have a good repayment record getting the loan can be rather hard.
But with the secured loan, a poor score and a good repayment record will help. However, these are not pre-requisites in order to qualify for this loan. For an unsecured loan, the moneylender requires that the borrower provide proof of their ability to repay the loan.
Additional Points To Keep In Mind Before Borrowing
Even with a poor score, borrowers may still apply for the secured loan. Even with the restrictions, this type of loan is highly likely to get authorised. This is despite whether you have several poor credit score. Also, the reason for this is because banks are more “secured” to say the very least.
Even then, borrowers need to keep in mind that failure to pay a secure means that they will lose the collateral put in. Lenders will recover their money by using the backup and insurances documentation you sent to them.
While you are looking at your ability to comfortably repay your personal loan, consider your familiarity with the various governing attributes of both secured and unsecured loans. Then you will not have anything else that will limit your choice when it concerns the loan type pit that you want to fall into.
Also, you need to recognise that it is just you and ultimately you have to repay all the dues. But of importance, just be analytical about the loan choice you make – it is very essential.
What This Means For A Borrower
Singapore is plentiful of money lending services which often help Singaporeans satisfy their financial needs. Due to this, the Singaporean government has stepped in to protect borrowers. With the set rules and regulations, it has made working with licensed moneylenders in Singapore safe for borrowers.
This will protect you from the very high interest that you might incur as you work with illegal moneylenders, particularly if don’t make prompt payments.
For moneylenders, they have a 4 percent cap, meaning it’s safer and clearer for borrowers to understand these rates especially how the interests might work against you.
The eventual goal for borrowers is to decrease the costs on the interest they get on their loans. Again borrow should consider taking only the money that they absolutely need. Regardless of whether you get the secured or unsecured loan.
Remember that loans can be costly when you default on them. However, it’s essential you note that loans are powerful tools, as you are managing your finances. But, they only need to be used when you plan for it and need is legitimate. And when managed well, it will not bring you any trouble with all loans that you borrow.