When you're strapped for cash, you will be tempted to borrow money. In Singapore, there several lending companies that offer cash loans, however, there are things you need to ask yourself before getting a loan.
How much is the interest rate?
One advantage of lending companies over banks is their approval time. With banks, it will take a couple of weeks before your loan gets approved, and they do a lot of background check. If your credit score is bad, you will most likely not get approved for cash loans. Lending companies, on the other hand, can get your cash loans approved almost immediately. The only drawback is they may have high interest rates.
Before applying for a loan, ask how much they are charging for the interest. If it's too high, look for another alternative. You may consider borrowing cash from a family member or a trusted friend, who may lend you the money without interest.
What happens if you can't pay on time?
There may be times when you can’t pay your due on time. Ask the lending company how much they charge for late payments. Make sure that you can afford it. Reconsider if the interest rate for late payment is high.
Is collateral required?
Loans from most lending companies usually don’t require collateral, but there are those that will let you give up a personal possession like a car. If they ask for a collateral, make sure that can pay the loan back, else you risk losing your car.
Is there a loan application fee?
Some lending companies will give you the loan proceeds without asking you to pay for the interest rates first. There are some that ask for an application fee, so you won't really get the entire amount of the loan. Try to check with different lending companies if there is a loan application fee. It's like you're paying for another interest when you pay for an application fee.
Do you really need the loan? This is the first question you should ask yourself before considering to get one. Ideally, only get a loan if you're buying a house. Otherwise, get another option to pay for your other obligations. It is tempting to get a new car, or a new vacation, but you need to consider how much you will be paying for it, as well. Get a loan only when the interest is really low.