Cash Loans: Three Main Considerations Before Applying for a Loan

The effects of the COVID-19 pandemic on the economy have been significant. Specific sectors like tourism, retail, and food services were disrupted, causing job losses or wage cuts.

In times like these, some people rely on cash loans to deal with temporary financial challenges like medical emergencies, paying rent, and keeping the lights on. While the process of taking a loan is easy, it’s essential to put a great deal of thought into it first to avoid financial problems later on.

If you are looking to get a fast cash loan in Singapore, here are some things you need to consider.

Reason for the Loan

Having a clear and specific reason to take a loan is the first thing you must determine. Taking a loan also brings with it a certain level of responsibility. Depending on how you manage the loan, it could either bring in relief or more headaches.

People usually get cash loans as a way to deal with unexpected expenses and emergencies. If your reason for borrowing is not a financial emergency, it would be best to reconsider getting the loan.

If you genuinely need the money, it’s advisable to use your savings or emergency funds first. This way, you’ll only borrow the extra money you need instead of taking a larger loan that can be difficult to pay off.

How Much Money You Can Afford to Borrow

Never borrow more than you can afford to pay back. Know the exact amount you need and stick to it. The higher the loan you get, the harder it might be for you to pay off.

People usually rely on the monthly instalment or the annual percentage rate (APR) to determine if the loan is affordable. Consider checking the total amounts payable (TAP) as well.

TAP is the entire amount you have to pay, including the interest throughout the loan’s life, plus additional costs like processing fees. Understanding TAP is helpful because if you borrowed a small amount and repaid it quickly, your loan’s TAP will be lower.

For example, if you borrowed just the right amount and talked to your lender about paying it in 6 months instead of 18 months, your loan’s TAP will significantly be cut down. This should help you secure a loan that’s far more affordable.

Review Your Credit Score

Cash loans are considered unsecured loans, which means they don’t require any collateral. Lenders and other financial institutions rely on the borrower’s credit scores. If you have a high credit score (1850 or higher), you can get lower interest rates.

Before applying for cash loans, review your credit score. You can request a copy of it from Credit Bureau Singapore, subscribing to the My Credit Monitor (MCM), or with the help of credit reference agencies.

A bad credit score ranges from 1000 to 1723. If your credit score falls within this range, you are more likely to be rejected by banks or be given higher interest rates. Talk to your credit reference institution if you think there are any errors that need to be ironed out about your credit score.

Cash loans can be beneficial to those who are in dire need of money. However, it is essential to remember that a loan is also a binding contract that should never be taken for granted.

By doing your research, reviewing your finances, and working with a trusted lender, taking a loan won’t feel intimidating.

Capital Funds Investments offers reliable, fast cash loans for those who require extra funding but don’t have the time to go through all the lengthy processes the banking system requires. If you need a loan, visit our application page to fill out a loan application and view the requirements.