Personal loans offer a quick and easy solution to urgent financial requirements. Be it your son’s exam fees, unexpected medical bills, or the cost of repairing your car – your small yet urgent monetary needs can be put to rest with a personal loan. However, personal loans are unsecured loans, meaning that you cannot (or do not need to) mortgage some of your valuable assets to get the loan. This is exactly why lenders usually charge a higher interest rate on personal loans. The good news is you can still lower the interest rate to some extent, with a little research and planning. For instance, contrary to a common misconception, some licensed moneylenders offer lower interest rates than banks do. Here are some useful tips on how to get a low interest personal loan.
As with shopping clothes or grocery items, the more you compare the better your chances are to land a cheap deal on personal loan. You should get quotes from at least three moneylenders. When comparing, consider your debt servicing ratio. In simple terms, you debt servicing ratio is a ratio between your total monthly income and your total monthly loan repayment obligation. A look at this ratio would help you know whether you are currently is a position to take the load of a personal loan. Ideally, your repayment obligations should not exceed 50 percent of your monthly income. The lower your debt repayment ratio, the lower would be your personal loan interest rate.
If you have plans to take up a personal loan or any loan anytime soon, you should try increasing your income level. When lenders offer a personal loan, they check mainly two things – your income source and your income level. If you have a steady source of income, you are likely to get a personal loan. However, how much you can borrow would depend on your income level. Borrowers with a high income level not only get a large loan amount, but also get discounts on interest rates, from some licensed moneylenders in Singapore.
When looking for a low-interest personal loan, you may come across some unscrupulous lenders who would promise you to offer lower rates. Don’t get into the trap. First, check whether the moneylender is licensed. If not, run away – no matter how lucrative the offers seem. Some unlicensed lenders will offer you incredibly low-interest rates, but will charge hidden fees. Some may even have unrealistic repayment terms. Once to sign a contract with them, you can get into serious problems. So avoid unlicensed lenders and make sure your read the terms and conditions of a loan before signing a contract, even when you are borrowing from a licensed moneylender in Singapore.
Another way to lower interest rates on personal loans is by improving your credit score. While this is not possible in a short-term, you should start as early as possible. If you have an existing loan, repay it on time. That would help improve your credit score.