Debunking Misconceptions About Personal Loans

Taking out loans is a common practice when you are in need of purchasing a home or a car. It’s no different in Singapore either, where in March 2022, the household debt reached 66% of the country’s GDP. When experiencing financial deficiency, people seek options that suit them, and personal loans are one of the viable choices at hand.

Personal loans have an increasingly bad reputation, with personal loan myths going around regularly. These loans are just like any other financial tool that needs to be used responsibly. Setting the record straight may help shed light on the truth behind many misconceptions – learn more below.

A Potential Threat to Financial Health

Mismanaging any type of loan can lead to financial problems, but this has nothing to do with personal loans. Wise use of personal loans can improve your financial health and help you get out of debt quickly. Use the loan as a debt consolidation tool and reduce the high-interest payments.

Taking out a personal loan can be useful if you wish to buy a new car or renovate your home.
You may even consider educating yourself to get the next promotion offered at your company.

Always Apply for More Than You Need

To speak truthfully, is that a necessary move? Just because you are eligible for a higher loan doesn’t mean it’s a smart financial move. Higher loans impact your credit score; if you fall behind on your payments, you can get stuck even further.

A second thing to consider is interest rates. Just because personal loans have lower rates than interest rates on credit cards doesn’t mean that they don’t exist. Therefore, get only as much as you need and keep within your limits.

Only Those with Fixed Salaries can Obtain Personal Loans

If you can demonstrate to the banks that you have a source of income and meet their requirements, banks will not lock you out. A very high percentage of the workforce in Singapore is self-employed, and banks are very flexible in working with this clientele.

Most banks, however, require you to have a S$30,000 minimum annual income. Not to worry – if you don’t belong in this category, there are always other options that you can consider, like licensed moneylenders.

Applying for a Personal Loan is a Long Process

This might have been true in the era when technology didn’t exist and numerous forms needed to be filled by hand. Leaving all that in the past, applying for personal loans in Singapore – and elsewhere – is now done electronically. It only takes a few minutes to fill out an online application. Depending on where you are applying, you can get the loan approved the very next day or within several days.

Providing Collateral to get a Personal Loan

Most personal loans are unsecured, meaning they don’t require collateral and are not backed by assets. This is true because the amounts are small and based on your credit score. If you are unable to pay the personal loan, loaners may not take away any assets, but they will take legal action against you. Other unsecured loans include credit card loans, education loans, and personal lines of credit.

The Best Personal Loans in Singapore

People will see the benefits of using them as an excellent financial tool by demystifying the myths circulating about personal loans.

As a licensed lender in Singapore, Capital Funds Investments can help relieve your financial burden and open you up to new and better loaning opportunities.

Our offer includes a full administration refund for all first-time users and no interest in case of returning the full principal amount in full. We offer you 60 monthly installments and the possibility to match or give lower interest than our competitors. Contact our team today for the best services in personal loans in Singapore!