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 or become a victim of loan scams. 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.
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.
With so many types of personal loans available, you may find yourself needing help picking the right one. If you need a loan as well as some assistance with financial planning, contact LoanHere today.