Clearing Up 4 Untruths About Personal Loans You Need To Know

Loans get a bad rap for many reasons. The most common concern is how loans can sink someone into deep debt, and make them over-reliant on external sources of cash.

However, loans are not always bad. In fact, many people have misconceptions about loans, like personal loans, that contribute to this impression. The truth is, personal loans can be beneficial to those who know how to use them wisely. One should not shun loans just because of some misconceptions they have.

So, here are some of the common misconceptions about personal loans you should know:

Myth: Personal loans are bad for your financial health

One of the reasons put forward to explain why personal loans are bad for financial health is that they increase your debt burden. However, there is good evidence that personal loans can be used to manage your debt. For example, you can take a personal loan to pay a higher interest loan such as credit card loans. Using personal loans to consolidate your debt repayment helps streamline your repayments and helps you clear your debts faster.

Myth: Personal loans are not guaranteed if you don’t have a fixed salary

Quite often, you might think that banks and moneylenders are more reserved when giving loans to those who are self-employed. But this is not true. The licensed moneylenders in Singapore have become more flexible when giving personal loans because the current data suggests that as many as 8.4 percent of the resident workforce in Singapore are self-employed. There are several money lending options available for those who earn less or are self-employed.

Myth: Collateral is needed when getting a personal loan

Renovation or housing loans are notorious for their need of collaterals. But not all loans in Singapore require some collateral. Personal loans in Singapore are mostly unsecured, which means they do not require any collateral. Some other examples of unsecured loans include credit lines, education loans, and credit card loans.

Myth: People with low credit score shouldn’t bother applying for personal loans

The underlying presupposition is that poor credit scores can often disqualify you from personal loans. However, a lot of moneylenders in Singapore are more willing than you think to lend to people with bad credit scores. However, if your credit score is really too low, you can build your credit score by applying for small short term loans and paying them on time. This technique will help you qualify for larger amounts once you successfully build your credit score.

Conclusion

There are several myths floating around about personal loans. That is why understanding about loans before you give them a try is so crucial. Nonetheless, you can always consult a professional moneylender in Singapore to give you adequate knowledge about personal loans before you make up your mind about applying for such loans. To ensure a safe borrowing experience, begin your journey by seeking out one of the moneylenders on the registered list of moneylenders in Singapore.

 


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