Say you’ve been looking to buy a new pair of shoes all year round, and then you learn that the Great Singapore Sale is coming. Oh perfect timing, that’s probably what you would think. Logically speaking, that is the mindset of a typical person, who would deduce the sale time is the best time to pick up a bargain.
Now, when it comes to taking up loans, we naturally think that low interest rates would mean a good time to make that commitment. But is a period of low interest rates really the best time for you to borrow? We may be blind to certain factors.
What Are Your Priorities for Personal Loan?
Getting yourself a Low Interest Personal Loan means that you will be paying less in terms of making your repayments on a monthly basis. This will certainly be less taxing for you, and an attractive deal at the same time if it means sacrificing a smaller portion of your monthly income. But, this would usually come with lesser options, such as:
- Lacking the freedom to pay off your loan faster (clearing your debt earlier).
- Little or no choice of your repayment frequency.
- Lacking the feature of a redraw facility – this allows you to have access to the money you have already paid on your loan.
If early payoff is something you would prefer to have, make sure you open your eyes wide enough to see that no penalty is involved in doing so. If none of these options are of any interest to you, then it is not much of a problem after all. You can simply focus on securing the best possible personal loan with the lowest interest rate.
Personal Loan is not just about the Interest Rate
Of course, the key benefits of borrowing at low interest rates are the cost savings, which would probably be the top of your priority when managing your finances. There will be many moneylenders out there offering similar rates, so how can you decide on the best option?
To increase their market competitiveness, these moneylenders will attempt to differentiate themselves from the rest, and come up with a variety of offers to entice and incentivise borrowers to strike a deal with them. These include low processing fees, free extra repayment options, low or no ongoing maintenance fees, and many more. Be on the lookout for such deals that will actually make an overall difference to your personal loan.
The services offered by the moneylender should also be part of your consideration. Excellent services are generally related to friendly and approachable staff who uphold their commitment to their customers. Hassle-free and efficient moneylenders would also provide you with fast or even same-day approval, and answer all your enquiries to meet your needs. You would not want to find yourself going back and forth with these financial institutions over issues that leave you unsatisfied at the end of the day.
Beware of the Traps when taking up a Personal Loan
There is no such thing as a free lunch in this world. Surely there must be a reason why some moneylenders can offer such low interest person loans? Unfortunately for you, some money-sucking lenders are out to make money from your loans. You will be surprised at the number of low-interest personal loans that contain various types of hidden costs, making them much less favourable than other options with higher interest rates.
If you do your homework properly, you will discover some of these low interest personal loan may only look attractive on the surface. It is important to understand the little details that are made less noticeable by the moneylenders. Otherwise, you may find yourself stepping on a landmine due to the unexpected high upfront fees and charges. Furthermore, most of these low interest loans are spread over a longer term, which might end up costing you more at the end of the term. Don’t forget, the longer the term, the more interest you will pay. Do your math.
There are many factors you need to consider and question before you make an agreement with your signature. Do sufficient comparisons and find out which loan product suits you best. Don’t think that you’re wasting time by shopping around a little more, or that you are letting go of a golden opportunity to hop on the low interest rate bandwagon. Taking up a personal loan is not as simple as buying groceries.
STILL UNSURE OF PERSONAL LOAN INTEREST RATES? LEARN THESE 7 THINGS ABOUT PERSONAL LOAN INTEREST RATES.