What to Consider When Taking A Loan
Many people are in need of loans for various reasons, some credible, others not so credible. Taking up a loan is a personal decision that can affect the borrower’s financial well being. Either positively or negatively. If the money is being borrowed to be invested in appreciating assets or a business venture, this can help improve the borrower’s future financial position. On the contrary, there are people who take up loans to fund their holidays, weddings or other leisure activities that will not earn them any tangible profits. Most of them end up regretting because their financials become a mess after that. Whatever the reason for taking up a loan, there are factors that you will need to consider prior to taking a loan.
1. Economic Position
First is the economic position of the country which has a direct impact on the interest rate. There are times in an economy when it is not advisable to take up loans unless it is for an emergency. One example of such periods is when politics is heating up prior to elections. Since interest rates are determined by central banks in respective countries, they are more likely to increase the rates during such times. When political temperatures are high, an increase is an attempt to raise more funds. Why? This is to shield the economy from political uncertainties.
2. Financial Institution
Second is the type of financial institutions one intends to borrow from. Much as these institutions are govern by a regulatory body, they each have different lending requirements. Savings and credit cooperatives for example will require you to save a certain amount of money with them before they can give you credit. Other financial institutions only give secured loans which must be accompanied by collateral. Licensed moneylenders for example ask for collateral in form of goods worth the loan amount. Many people go to them because of the fast approval time and less stringent checks.
3. Repayment Period
The other important thing to think about is the repayment period for the loan. Most lending institutions give options so that the borrower can select what fits them. They however try and convince their clients to spread the loan for the longest period, citing lower monthly repayments. While this may sound lucrative, you will end up paying more than someone who took the same amount and paid higher installments for a shorter period of time.
4. Terms and Conditions
Last but not least is reading, understanding and comparing terms and conditions of different lending institutions. In most cases they appear the same but there is always that small difference that can easily be ignored. And it makes a whole lot of difference. In fact, very few people take their time to go through the whole blue print and seek explanations on areas where they do not understand. These few individuals that do, can attest that this effort in some cases has saved them loads of money.
If you need a loan, approach a bank or a licensed moneylender. We are the best licensed moneylender you can find in the whole of Singapore. Our fast approval, instant cash and low interest rates are why our customers always come back to us.