All about Personal Loan & How to Borrow Responsibly?
Loans | Personal Loansby Priyadarshini 23 September 2020
Will you be able to repay the loan easily? Do you think you will end up paying more interest in the due course? Do you absolutely need the loan? Ask yourself these questions before you make up your mind for a personal loan. It is vital to be prudent with financial decisions, so that you don’t have a tough time getting rid of debt. Before you put your signatures, make sure to compare all the loan options available, do your calculations, and only then go ahead! Read on to know all about Personal Loans and how to borrow responsibly.
How does a personal loan work?
Personal Loans can ease your need for cash flow and assist you to make your immediate financial commitments. You can apply for a personal loan with any bank or a bank of your choice. Different banks have different interest rates, so make sure you look into a few of them before you make your final decision. You need to fulfil some eligibility criteria and ensure you can afford to repay the loan amount. You can opt for the interest rate that suits you and thoroughly evaluate the interest you will be required to pay.
Applied Interest Rate (AIR)
When it comes to Personal loans, they are usually flexible and everything depends on how much you borrow. Two other related factors are how long you want to borrow for and a few other associated charges. Your personal loan interest rates are personalized basis the application you submit and you will get to know the final interest rate levied on your loan once your application is approved.
Effective Interest Rate (EIR)
Effective Interest Rate is the total interest rate you are required to pay on your personal loan. This is generated based on how long you borrow for and includes all other admin charges. Pay attention to the EIR always, to ensure you are not getting ripped off!
By now, you already know what loan tenure means. It is the number of years you will take to repay the loan. Broadly discussing, it is simple and you can go by the amount which you are comfortable with to pay as monthly instalment. You can choose to pay an easily do-able amount every month but also, keep in mind that the longer the loan tenure, the higher the interest.
All Banks levy a processing fee on loans. However, there are a few banks that do not have a processing fee on personal loans. When you decide to take up a personal loan, research well, and find out which banks offer such services.
You should always spend your money wisely and save enough for tough situations. However, we all know that everything does not happen according to the plan. Personal Loan can come to the rescue then. But make sure to consider your need and financial situation before you take the call!
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Personal loan in Singapore