5 Common Reasons Why Singaporeans Take Personal Loans

Loans | Personal Loans

Personal loans are on the rise in today’s market in Singapore. Some people use it as their last-minute attempt, others carefully plan and apply for a personal loan. Different people have different reasons for choosing a personal loan, but most commonly it is to keep creditors at bay. Whatever the reason is, personal loans can be helpful especially when your piggy bank does not have enough money.

Five common reasons why people take up a personal loan

Wanderlust!

Travel fervor is gripping people across the globe and it is no surprise that people sometimes take up a personal loan to fund their dream trips. After all, we all know how expensive popular places like Melbourne, London, Barcelona, and Rome are. Going for a luxurious vacation is on everyone’s list and some people resort to personal loans to sponsor their trip.

Credit Card Consolidation

Well, one of the most obvious and common reasons folks apply for a personal loan is to consolidate their credit cards. There is no pint in paying the interest charged on credit cards year-on-year. Instead, many people find it easier to take up a personal loan and pay off the interest at one go. So people usually take up a personal loan to become debt-free.

Renewal of COE

Singapore has witnessed a rise in the prices of COE to an extent that it became more expensive than buying an actual car. Since people cannot take up a car loan to renew their COE hence, many people choose to take up a personal loan. With the help of a personal loan, one can pay off the COE in installments and also have control over the tenure of the loan. Some people may choose to renew COE for another five years so, the loan quantum offered for a personal loan will easily cover this in most cases. It is recommended that you choose this option even if you have the cash at hand to pay for COE renewal.

Gambling Habit

 

Well, it’s no surprise that many people are into gambling and it is one of those habits that don’t die easy. And unfortunately, compulsive gambling could lead to a spiral of never-ending debt. For some people lady luck works, for some others lady luck takes a tour of the toilet when they place their bet. Resorting to loans to clear debts owing to gambling is not a good idea but it is still better than signing up for credit cards. The interest rate on a personal loan will not exceed more than 20% if you borrow S$1000. Clearing off gambling debt by taking more debt is like trying to put out a fire with gasoline. However, many people choose this option to clear other outstanding dues. We are not condoning that you borrow money, but this could be one of your jail-free cards to be put to use.

Purchase Expensive Second-hand Items

 

 

Credit cards are good to buy something new or purchasing from malls, stores, etc. But if you wish to buy items from the second-hand market, the transactions usually happen through hard cash or bank transfers. This means that in case you are buying an expensive item for example a Rolex watch, which will need you to shell out thousands of dollars. Some people in such cases opt to take up a personal loan. The loan tenure will usually spread out for 1-2 years and you will be required to pay a reasonable amount every month. It is a great idea if you can keep up with the monthly instalments.

Taking up loans for ‘wants’ and not ‘needs’ is the worst thing you can do. Snowballing debt is never a good idea, so plan things carefully and take a loan only when necessary.

Personal loans Singapore