Loans get a bad name and are widely regarded as the archenemy of any budget. However, that is not always the case. A loan that you get from a legal money lender in Singapore may actually help you stay within the confines of your budget.

All you need is a little discipline and to follow the five rules of thumb that we explain here.

1. Only borrow from legal money lenders

Perhaps the worst mistake that anyone can make with their finances is to borrow money from an unlicensed money lender. Loan sharks prey on the vulnerable – their offers may seem reasonable at the outset but they are designed to entrap you with exorbitant interest.

By contrast, every legal money lender in Singapore is regulated by the Ministry of Law. Interest is capped at 4% per month and there are several similar financial protections for consumers’ benefit. A loan from a licensed money lender can help you address your cash needs in the short term and balance your budget in the long term.

2. Get a debt consolidation loan

If you are drowning in debt and haemorrhaging your income to pay various creditors just to survive, the odds are that you would benefit from a debt consolidation loan. As the name suggests, this loan addresses all your creditors by merging your financial obligations into a single pipeline.

One critical advantage of this approach is the clarity that it brings. When you no longer have to juggle multiple debts with their varying rates and terms, it is easier to visualise your way out. It puts into perspective how much you have to pay and for how long. That light at the end of the tunnel is a great motivator to budget and break free financially.

3. Build discipline

For many people, obtaining a loan is an educational journey that encourages the individual to take better charge of their money, and to be responsible for their actions. This applies regardless of whether the loan is from a major bank or a legal money lender in Singapore.

As a borrower starts to pay down their debt through consistent repayments, it should instill in them the importance of planning for their future as well as spending their hard-earned money wisely.

Rather than damaging your budget, it becomes the foundation of competent financial understanding. Accordingly, credit agencies award someone who has incurred debt and paid it off a higher rating than someone who has never been in debt at all. It opens the pathway for bigger loans from legal money lenders in Singapore and lowers interest rates in the future.

4. Pick the right loan

Continuing on the theme of financial education, choosing a loan from a legal money lender is akin to a lesson in independence. Sure, you may ask for assistance to understand the terms and conditions, as well as your obligations at the beginning. However, the systematic and regular repayment schedule will teach you good financial sense over time.

The odds are that you will begin to understand the concepts and find yourself gradually realising that you are capable of handling such a responsibility. Many people who take on formal debt find themselves unwilling to go through the embarrassing experience of asking for money from close friends and relatives ever again. Wouldn’t you like to join that group?

5. Stick to your payment schedule

Every legal money lender in Singapore must ensure that you understand the terms of a loan before approving it. One of the most crucial pieces of information they will share with you is the payment schedule. It outlines how much is to be paid and when.

If you pay the required minimum amount to service the loan (and not just the interest on it), you will be free of it within the time window as planned. This is the best of both worlds – it allows you to use the money from the loan in your personal life every day and still eliminate the debt at the time of your choosing.

Conclusion

Sticking to a budget can be a chore but the quick infusion of cash with a loan from a legal moneylender in Singapore can help. If you stick to the five rules above, there is no reason why you cannot both stay on track with your spending and manage a loan simultaneously.

If you need a loan as well as some assistance with financial planning, contact LoanHere today.

There has been numerous media coverage on loan scams of late as the Covid-19 pandemic has enticed more and more cunning scammers to ‘upgrade’ the tricks under their sleeves to trap desperate individuals into getting a loan scam.

We are certain that most of you have heard stories of people being scammed and scratched your heads as you wondered how people could be deceived so easily.

The reality is that these scammers are persuasive as they are charismatic: a few words, dashing smiles, some strategic ego-brushing, and you’re under their spell.

Thankfully, there are ways for us to distinguish between legitimate loans and loan scams. So, before you decide to take out a personal loan from a licensed money lender, bank, or financial institution in Singapore, look out for these tell-tale signs:

1. Upfront payment

If you are required to pay an upfront fee or deposit to take your personal loan application forward, it is likely a scammer trying to make off with your money.

Just ask any bank or licensed money lender and they will confirm that a legitimate lender will never ask you to make any payments before receiving the loan. The act is deemed illegal in Singapore.

Therefore, if you find yourself in the presence of a so-called loan agent or consultant explaining that the upfront payment is for mandatory processing fees, advance repayments, or collateral, you should say your goodbyes and walk away immediately.

2. Missing physical address

Scammers will do everything in their power to make it impossible for you to get hold of them in the future. How, exactly? By failing to provide a real, physical address, of course.

This is done intentionally. Without a physical address, it will be incredibly difficult for you to press charges, let alone for the authorities to pursue them.

Before you get swept away by the perks of applying for a personal loan, put the brakes on until you can confirm the existence of a physical address.

3. No state registration or licenses

One of the biggest tell-tale signs that you are getting scammed is that the business doesn’t come with any legal license or registration details. In Singapore, it is mandatory by law for every licensed money lender to be registered with the legal authorities.

If a sketchy individual approaches you with a personal loan plan that wows you, remember to ask for their license and registration number to prove their legitimacy. In Singapore, every legitimate and authorised money lending institution is registered with the Registry of Moneylenders. Remember, you are always free to cross-check the information you’ve gathered.

4. No credit check

Did you know that credit checks are important for banks, licensed money lenders, and financial institutions as it helps them determine how financially trustworthy you are?

On the contrary, scammers wouldn’t even spend five seconds doing a credit check as they intend to scam you out of your money.

While credit checks can be a hassle, it appears that the hassle is necessary to prevent us from getting scammed when we apply for personal loans.

If the lender is making guarantees that are too good to be true before even running your financial history, that is a clear indicator to keep your guard up and be cautious.

5. Incomplete loan offer

Most scammers will prepare a mock offer in black and white that passes the bare minimum for a loan offer for the sake of deceiving their victims’ eyes.

If you look closely, you’ll find many flaws in the document, such as blanks on where the agreed interest rates and processing fee should be. This is why it is incredibly important for us to always read the fine print before signing any personal loan documents — it’s just good sense and it makes things easier for us to pick up red flags that would demand us to walk away and never look back.

Bottom line

As enticing as it may be, you need to stay alert as there is no such thing as a flawless (or free) personal loan.

• Licensed money lenders will not apply pressure to push you to be agreeable
• Scammers have a habit of offering deals that are too good to be true, such as offering 0% interest rates or 100% approval

Also, take note that a licensed money lender, bank, or financial institution will never ask for your debit or credit card details.

Speaking of card details, it is always best to refrain from sharing your identification number, driver’s license, or any other personal information until you are 100% certain you are dealing with a legitimate loan agent or consultant.

Unfortunately, we live in a time where a handful of irresponsible individuals are taking advantage of the financial woes experienced by many to feed their pockets. While personal loans undoubtedly have many benefits that can help us improve our credit score, manage debts, and provide us with financial assistance at short notice, let us be more vigilant in ensuring we are dealing with the right people when taking out a personal loan in Singapore.

Reach out to LoanHere to get free loan quotes from the top licensed money lenders in Singapore now!