A personal loan is an unsecured loan that may be borrowed from banks and other financial institutions such as licensed moneylender or loan companies to address different kinds of needs. It may be used for a purchase of goods and services, a down payment of a house or car, repairs or even used as a loan capital for putting up or enhancing a small business.
Unlike other best personal loans in singapore that are granted for a specific purpose such as car loan or ofw loan, a personal loan will depend on the borrower on how they intend to use the money. There is no limitation to how it will be used. As such let us identify the advantages and disadvantages of getting a personal loan.
- Approval Processing – a personal loan is one of the types of loan that can be granted with minimal requirements and short processing time. If there is an immediate need for cash without going through the complexities of preparing too much documentation, applying for a personal loan would be the best one to apply for.
- No Collateral – Personal loans are unsecured types of loan therefore a collateral is not required. There is no lien on any property that a borrower has and it contributes to the shorter turnaround time of processing the application. There is no need for the lender to evaluate and validate the value of property placed on collateral.
- Promotions – a personal loan is often the subject of promotions especially for big financial institutions who are lenders such as a bank. To attract borrowers, the loan can be specifically customized to target the kind of market these financial institutions plan to attract. An example would be lowering interest rates to attract average wage income earners.
- Interest Rates – an interest rate applied to a personal loan will often be higher than other types of loan which address a specific need and require a collateral. As these are unsecured loans, the lender needs to raise interest rates in order to supplement the loans risk of default payments.
- Limited Amount – applying for a personal loan may not grant us the same amount other types of loan may give. Because of its nature of being unsecured, the basis for the lender to grant a personal loan is based on how the lender sees your capacity to pay. There is a chance that the lender will grant you less than what you are applying for.