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How do you choose the right loan?
The world that we live in today is full of opportunities. There are so many wonderful things that we would like to own and enjoy. Life isn’t about standing still, it is about moving on and wanting more. Now, with this comes the desire to provide the best for your family, travel across the planet, fulfill life-long dreams and discover more as you journey on.
Some individuals take the help of debt to fulfill their commitments and desires. But is being overburdened with debt the right way to live? Now, that is a debatable topic. An individual can carry debt, but he should be able to handle it wisely. Payments should be made on time, repayments done etc., etc., to efficiently wade through any debt pile. Having a debt is always not troublesome. Good money management and timely payments go a long way in helping you clear your debts easily.
Understand why you need a loan:
There are various financial institutions in Singapore that can give you a loan for whatever your requirement is. But don’t go for a loan just because it seems like the right thing to do. Think. Analyse. Compare. Avail. This should be your motto when you take a loan. Compare various loan products across institutions before you actually make the pick. Get the best deal possible. Banks in Singapore sanction two types of loans namely - Secured and Unsecured loans.
When you take a secured loan, you will be required to pledge some asset as security against that particular loan. Unsecured loans do not need any form of security, but they come with high interest rates. So first make a sound decision on why you want the loan.
Choose a loan that suits your requirement best:
If you are buying a new property, that’s great, go for a home loan that actually fits into your budget. You can also go for a renovation loan, refinance loan or a mortgage loan depending on your home requirements. Don’t overstretch yourself when you go for a car loan. Always choose a car model that is compatible with your wallet and is also your everyday companion. Personal loans can be the savior for those unforeseen circumstances or for you to just go on your dream holiday. Take an education loan to finance higher studies, but do it with the right loan package and with some amount of repayment planning in place. You can go for fixed term loans or revolving loans, but the interest rates that you would be paying would vary significantly.
There are a few aspects that you need to consider when you go for a particular type of loan. For example if you are going for a home loan, analyse how much you should borrow and what should be the tenure. Since home loans tend to go on for longer periods of time, make sure you don’t pay more than you actually intended to. Try pre-closing or paying partly whenever possible. Do not borrow more than you can actually repay, just because you qualify.
Always be aware of the down payments and the monthly installments that you have to give towards any loan. Another key aspect that you need to consider is whether the interest rates that the bank is offering towards a particular type of loan is affordable as this boils down towards that total cost of the loan. Make sure you don’t burden yourself with debt and ensure that you are fully covered financially before you enter into any debt cycle.
An easy and helpful tool to help you understand your debt repayment better is an EMI calculator, which is available on the internet. This tool projects a forecast of you monthly amortization schedule and helps you plan your finances better. An EMI calculator can be used for any type of loan and requires only a few inputs. Prospective borrowers can get an estimate of how much interest and principal they would be paying for the selected loan tenure and the availed loan amount in just a few minutes.