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Interest Rates Unsecured Personal Loans – A simple guide to four types of personal loans comparing interest rates, one-time processing fees, loan terms and when you should apply. 1) Personal Installment Loans The first is the regular personal installment loan. Different banks have different names but the principle is the same: you borrow a certain amount, pay a one-time processing fee (banks usually refuse this) and agree to repay the amount in fixed monthly installments up to 60 month. How it works: Personal installment loans allow you to borrow money and pay it back in equal monthly installments. Interest and fees are calculated for the entire loan tenure and added to the loan amount. Fees: One-time processing fees from $0 and up to 3%. Interest rates vary from bank to bank and start from 3% (effective interest rate at 6.96%) and above. Banks sometimes waive processing fees and offer exclusive interest rates during promotional periods. Loan amount: The installment loan is based on the available credit limit in your personal loan account or line of credit. Usually, the maximum amount is 4x monthly salary. This can be up to 10x your monthly salary if your annual income is over $120,000 and you have a good credit history. Loan tenor: The repayment period usually ranges from 12 to 60 months. When you should use it: A personal installment loan can be used when you need a lot of money to cover a big ticket expense that will require you to pay it back. Example: Your investments have gone sour and you have $40,000 in outstanding debt. Take a personal installment loan over, for example, 24 months, and pay the amount gradually in equal monthly installments over the length of the tenure. Compare the most attractive personal installment loan offers in Singapore today, only at . 2. Line of credit The second type of personal loan is the line of credit, which is an overdraft facility that only charges interest when you withdraw from the account. How it works: Once approved, money can be withdrawn via ATM, check, internet banking or to a physical bank branch. You are charged interest when you withdraw money. When you pay back your money, no interest is charged. Fees: Line of credit usually has an annual fee ranging from $ 60 to $ 120. Interest rates are generally between 18% to 22% p.a. Before the promotional offer.
Loan amount: Banks usually offer 2x monthly salary as a credit limit, but this can go up to 4x or 6x if you include other credit facilities. Loan Tenor: There is no fixed term. You have the facility for as long as you want. You pay interest when you use it and vice versa. When you should use it: A line of credit is useful as a standby cash fund for unexpected expenses. If you need money for an emergency, you can withdraw money quickly without an approval process. But the trick is to withdraw money only if absolutely necessary. Example: You are a small business owner and need a standby cash facility to purchase office equipment, supplies, or hire extra labor for a busy sales period. After the busy period is over, quickly repay the amount of money borrowed from the line of credit. Compare the most attractive line of credit offers in Singapore today, only on. 3. Money transfer or balance transfer The third type of personal loan is money transfer (FT) or balance transfer (BT). The loan facility uses the credit available on your credit card. You pay a one-time processing fee and enjoy a 0% rate for between 3 and 12 months. After that, you either settle on the total outstanding amount, or you will be charged an interest rate between 18% and 29%, depending on the credit facility of the money. How it works: Balance transfers help you transfer outstanding balances from one or more credit cards to a low or 0% credit account or line of credit. It provides quick cash in times of emergency or need. It is subject to a one-time processing fee on the approved transfer amount. Fees: For balance transfer offers, banks usually charge a one-time processing fee of between 1% and 5% of the approved loan amount. The best balance transfer offers will waive this processing fee. Loan amount: Balance transfer loans are usually between a minimum of $500, but can be up to 10X your monthly salary if you have a high income and good credit history. Loan tenor: The repayment period is usually between 6 and 12 months before the high interest rate kicks in. When you should use it: Balance transfers are best if you need money quickly, or have large short-term expenses on the horizon and want to avoid the high interest rates on other types of loan facilities. Common use cases include consolidating outstanding debt payments on multiple credit cards or emergency car repairs or medical bills, investments or business opportunities. Also remember to compare the best balance transfer offers on the market, which can eliminate or offset processing fees through incentives or cashback. Example: You have a total debt of S$30,000 spread over various credit cards, and you are juggling paying between 20-25% interest rate on each credit card every month. Use a balance transfer to consolidate all outstanding credit card debts into one, and gradually repay the combined amount every month, while enjoying either zero or low interest rates every month for the duration of the loan, which gives you some breathing room. Have a plan to eliminate or reduce the total amount of debt you have at the end of the term. Compare the most attractive weight transfer offers in Singapore today, only at. 4. Debt consolidation plan The fourth type of personal loan is the debt consolidation plan, which is a government-approved scheme available with all leading banks in Singapore. If you have multiple unsecured loans – such as lines of credit and credit cards – and you’re finding it difficult to manage all the repayments, look into a debt consolidation plan. It brings together all open unsecured credit under one umbrella, which means easier repayment and debt management. You have to remember only one repayment date, and the interest rate is lower than a regular personal loan. How it works: DCP only applies to credit cards, lines of credit and personal loans. Once approved, the new bank will take over all other loans from other banks. All amounts will be paid including fees and charges. The account will be closed or temporarily suspended. You must make monthly payments to the new bank managing the DCP until the full amount is paid. You can repay the DCP with the new bank after 3 months after the previous agreement with the DCP of the previous bank.
Interest Rates Unsecured Personal Loans
Fees: There will be a one-time processing fee. Depending on the bank and the promotional rate, the effective interest rate is usually between 6.7% to 12% p.a. Loan Amount: The loan amount will be the total balance on your credit card, line of credit and personal loan. And you must owe at least 12 times your monthly salary before you can apply for DCP. Loan Tenor: Term from one to 10 years. When you should use it: If you have problems with repaying the loan and have a large amount of debt, the general guide is 12x monthly salary. Amount of debt to be repaid. Not only does it lower the interest rate, but it also forces you into a disciplined payment scheme. Because other facilities are closed or suspended unless you pay off the entire loan, you cannot accumulate more debt. Example: You have an outstanding debt of $100,000. Apply for a debt consolidation plan that closes all other credit facilities, allowing you to focus single-mindedly on paying the debt every month over a sustained period of up to 10 years. Compare the most attractive debt consolidation offers in Singapore today, only at. What you need to know before borrowing 1. Have a repayment plan The general perception is that personal loans are bad. Actually, it’s not all negative. Loans have a functional and, sometimes, profitable purpose. For example, imagine you have money stuck in stocks. Selling at the current price means losing money. So, take a loan, pay interest and pay it back when the stock price goes up. You still get a net profit if the profit on the stock is greater than the interest you paid. The real problem with personal loans is that many people don’t have a repayment plan. The usual game plan for borrowing money
Personal Loans Vs. Car Loans: What’s The Difference?
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