Factors that determine the type of loan to get
There are different types of loans available to the public and each comes with its pros and cons. Example, student loans which are advanced by the government to students in institutions of higher learning. Which students have to pay when they graduate and get jobs. Another example are high end loans such as mortgages advanced specifically for property acquisition or development. Other types include car loans, business loans and personal loans. All these loans have different requirements, interest rates and repayment schedules. Before taking up a credit facility, the borrower is expected to have decided on the type of loan they will take. This decision is guided by factors such as:
1. Purpose of the loan
It is important for the borrower to first define the reason why they need the loan. This will help them determine the most appropriate amount and avoid taking money that they do not need. Nowadays, there are sales people all over trying to convince everyone to take loans and sometimes they can be so convincing. It will however be a wrong move for one to go ahead and use this as their basis for getting into debt. In such a case, there is a high likelihood that the money will be wasted. Furthermore, the borrower will be left with a debt to repay. Defining the purpose of the loan is also important because it helps the borrower decide on the best type of loan for them.
2. Repayment period
Before approaching a lending institution to ask for a loan, the borrower needs to have decided on the period within which they can comfortably repay the loan with pocket friendly monthly remittances. Most financial institutions will try to convince their clients to extend the credit over a long period citing lower monthly deductions. This is however not the best option. In the long run, they will have paid more and the institution will be the main beneficiary. By determining the repayment period on your own, borrowers are able to make wise decisions on the amount.
Some loans have a shorter turnaround time compared to others and urgency can be a factor used to determine the type of loan one will take. In most institutions, salary advance takes a day or less to approve and so does emergency loans mostly by credit unions. Because of the risks involved in advancing such urgent loans, they are usually of low amounts. In addition, it has a short repayment period and can also come with higher interests. With credible financial institutions offering such facilities, the number of people going for illegal money lenders is lesser. Loans to finance projects are not urgent because the borrower has had enough time to plan. This is why mortgages attract lower interests and the repayment can extend up to 20 years.
If you urgently need a loan and there’s no one else you can turn to, consider getting a loan from a licensed money lender. Licensed money lenders are able to process your loans faster than banks. In addition to their fast processing time, their checks are a lot lesser than banks. Always verify that you are getting a loan from a licensed moneylender. Illegal moneylenders aka loansharks only contact you through cold calls or SMS. Licensed money lenders are not allowed to do that and have an office.
We are one of the oldest licensed money lenders in Singapore, contact us today if you need a loan.