When a financially taxing event pulls the rug off your feet, getting back up again can be a challenge. In such situations, the majority will turn to personal loans to whenever they need an immediate financial fix. Rather than prolonging and potentially exacerbating the problem, it’s best to nip it in the bud and recover from there.
That said, many people are still hesitant to apply for a personal loan simply due on misconceptions. In order to clear the air, we’ve gathered and debunked a few common myths about personal loans that you may have encountered, so that you can have more confidence in your financial-making decisions..
1. Applying for a personal loan is a long process
The long and tedious loan application process is a misconception that had stemmed from having to verify your identity and application information. Verification alone can take up anywhere from a few days to a few weeks. Thankfully, this is no longer the case! With algorithm technologies, lenders no longer require their workers to manually assess your situation and approve or disapprove your application. Just so long as you meet the prerequisites and provide the necessary documentations, a loan application can easily take up a few minutes!
Of course, it needs to be stated that the speed of a personal loan’s approval depends on the moneylending agency that you are applying in, but the general principle is that the time gap between your application for a personal loan and the disbursement of your loaned amount is kept to a minimum.
2. You cannot apply for a personal loan if you have an existing loan
A common reason why people who are looking into applying for a personal loan don’t push through is because they believe that they won’t be approved because they have existing unsettled loans. This is not true because most moneylending agencies still cater to applicants who have ongoing loans with them, provided that the applicant is more than capable of repaying two loans simultaneously. If not, the loan application will most likely be rejected.
3. Low credit score automatically disqualifies your eligibility
Given that banks and other financial agencies encourage people to maintain a good credit score, most people think that their personal loan application wouldn’t be approved if they have a bad credit score. While there is some degree of truth to the matter, it is worth noting that it’s not the end all be all.
A credit score is a numerical value assigned to borrowers indicative of their ability to repay their debts, and are consequently seen as a method to assess a credit applicant’s risk. With this line of logic, so long as you are deemed to have the ability to repay your debt, you still have a chance of getting your loan approved even with a bad credit score. This can be done by borrowing a smaller loan or the restructuring of your debts.
4. Interest rates for personal loans are high
As regulated by the Ministry of Law (Minlaw), licensed, personal loan moneylenders in Singapore can only charge interest rates of up to 4%. Any interest rates higher than that is an indication that the moneylender you’re tied to isn’t complying with the local mandate. Interest rates are only high if you fail to pay and settle your monthly repayment dues. This is simply due to the accumulation of interest: the longer and more frequently you miss your due dates, the more interest charges will pile up. You might have heard of loan horror stories where the interest charges are bigger than the loaned amount itself. Yes, this can happen but only if you fail to comply with the repayment terms that you and your lending agency agreed upon.
Personal loans are one of the easiest loan types that you can apply for in Singapore, as well as the quickest one. If you’re struggling financially and are in desperate need of a quick financial aid, we can help! As a licensed money lender in Toa Payoh , we are confident that we can help you get past your financial struggle in no time. Our loan application approval can take as little as 10 minutes, and you’ll have your money disbursed on the same day! Give us a call at +65 6384 0088 or head down to our Toa Payoh branch to talk to one of our loan officers so you can discuss your best options.