Assessing If You Are Ready To Apply For A Personal Loan
Many people wanted to availof personal loans for various reasons. An employee might want to apply so he can settle his payment for his condominium unit. A mother of three would like to avail of a personal loan to settle her kid’s tuition fees. Meanwhile, a school teacher is looking at borrowing money from financial institutions like Lender Singapore for the renovation of his home.
Indeed, different people have diverse reasons for borrowing. However, the purpose of applying for a loan at a licensed money lender Singapore is not the sole consideration. The majority of the banks base their approval of the loan application on your answers to the questions that they have.
Understanding Loan Readiness
Loan readiness refers to the borrower’s ability to use his borrowed money efficiently and effectively and pay off within its term. Your earnings, expenses, plus other responsibilities will contribute to assessing your readiness in obtaining a loan. As such, it is essential to undergo a self-check. This will help determine whether the loan would further improve the finances that you have instead of worsening your financial woes.
This article will help you evaluate your loan readiness based on the questions below:
What are the components of your Monthly Expenses?
Utility bills, debts, savings, and household costs are some of the many allocations for your wage. As such, make sure to know what are the things that you need to settle. Determine how much will you be spending on this to have an idea of your total monthly expenses. Household expenses might consist of groceries, rent, water bills, electricity bills, tuition, internet, and food.
If you know your monthly expenses, this can help you assess whether your salary can still cover your monthly installments. If your monthly income is not enough for your existing bills, then it might be helpful to borrow additional funds from Lender Singapore.
How much is your Salary Per Month?
Lenders such as the Lender Singapore must determine how much money comes into your bank account every month. They have to make sure that you can afford to settle your debts. When they ask you this question, make sure that you reveal to them the sources of your income. This includes your business and employment.
How Long Have You Been Running Your Business or Working on a Company?
Business tenure or employment provides an impression of stability. Such is the main reason why you have to be employed for at least one year so you can secure a business or personal loan. With employment or business tenure, this will assure the lender that you can be able to pay off the debt without fail.
Do You Have Enough Savings?
The ideal savings that you must have should be at least 3 to 6 months’ worth of your salary. For example, if you have a monthly salary of $300, then you must have at least $900 in your bank account. With this amount on your bank, it can already cover the ‘what ifs’ plus the emergencies. Meanwhile, you can use your salary to pay for your loans and monthly bills.
The question now is why you should apply for a loan if you already have enough savings in your bank?The answer will lead us back to your purpose. The savings that you have might not cover your needs. Indeed, people apply for personal loans from Lender Singapore for various reasons. A $900 savings amount might not be enough to cover home renovation or a trip to other countries.
Are you ready for ‘What ifs’?
This one refers to unexpected situations. Some people are persistent in applying for a personal loan because they have other sources of income apart from their salary. They set aside their additional revenue to deal with unavoidable circumstances that will need money. Indeed, it is amazing to know that you have saved enough money. However, it is best if you have other means of earning cash.
Do You have a Payment Strategy Plan?
A payment strategy refers to the details on how the payment will be made. It must lead to debt and expense reduction. Early payments can be rewarding. Late payments can add interest and entail fees. Moreover, you must decide on what tools must you use in making your payments. There arelicensed money lender Singapore who would require checks for every month. Meanwhile, others opt for a deduction from your account.
Digital solutions like bills enrolment and online money transfer will help you get rid of the manual payment process. These will also help you keep track of your payments. Furthermore, it will help you review your monthly cash flow.
In sum, lending institutions and banks use different terms and conditions on the loan. As such, make sure that you select the right lender and understand each loan’s features to help you choose which one suits your needs.