PERSONAL LOAN

PERSONAL LOAN

1. WHAT IS A PERSONAL LOAN?

Personal loans allow you to borrow a specific amount of money, which is then repaid with interest over time. Unlike credit cards, which offer a revolving line of credit, a personal loan provides a lump sum payment upfront. This type of loan typically comes with a fixed interest rate, meaning your monthly payments stay the same throughout the term. The average interest rate for personal loans is around 11.23%, which is usually lower than the average credit card rate of 19.07%. Check here for moneylender in Singapore

There are many lenders offering personal loans online, and applying is generally quick, taking only about 10 minutes to complete an application. However, getting full approval might take up to a week depending on how quickly you submit the necessary documents and how promptly the lender processes them.

2. HOW DO PERSONAL LOANS WORK?

Once your personal loan is approved, the funds are typically transferred directly to your bank account. If you’re using the loan to consolidate debt, some lenders will pay your creditors directly, helping you avoid the temptation to spend the money on something else.

Repayment starts about a month after receiving the funds. For loans with fixed rates, your payments remain the same until the loan is paid off. For variable-rate loans, the interest rate can change over time, potentially affecting your monthly payment.

3. HOW TO APPLY FOR A PERSONAL LOAN?

Before applying for a personal loan, it’s a good idea to compare lenders to find the best terms. This is a brief tip on how to approach it:

  • Shop for Rates: Look at different lenders’ interest rates and terms. You can use loan comparison tools, like LendingTree, to see offers from multiple lenders without affecting your credit score.
  • Submit a Formal Application: When you’re ready to apply, you’ll need personal information like your social security number and financial details, including recent bank statements and pay stubs.
  • Wait for Approval: Approval can take anywhere from an hour to several days, depending on when you submit your application and how fast you provide any requested documentation.
  • Receive Your Funds: With some lenders, such as LightStream or Discover, you could receive the funds the same day if your application is approved early.

4. KEY FACTORS TO CONSIDER

When choosing a personal loan, look for options with no origination fees and fixed APRs, which provide stable monthly payments. Other factors to consider include flexible loan terms, autopay discounts, and customer support. Some lenders offer same-day approval and fast fund disbursement options, which can be helpful if you need money quickly.

Many lenders offer prequalification options that allow you to check the potential interest rate without impacting your credit score. This can help you compare offers before making a formal application. Additionally, consider if the lender offers direct payment to creditors if you’re using the loan for debt consolidation. This feature can simplify the process by ensuring the funds go directly to pay off high-interest debts.