How to avoid getting overcharged for personal loans in Singapore
Singapore personal loans are great for emergencies or unexpected expenses. However, banks can exploit it if you’re not careful. Tips for getting a personal loan without overpaying:
Know the effective interest rate.
Know the effective interest rate before signing. Your finances go beyond the advertised interest rate. The advertised rate is the interest you will pay on your loan over time, but it does not include other fees that may increase your repayment amount. Because it includes lender fees, the effective interest rate is more comprehensive (e.g., upfront establishment fees).
Check for unusual charges.
The second thing to consider is whether your loan has hidden fees. Some lenders add hidden fees, so it’s best to read the fine print. Even for the same personal loan, interest rates can vary. Lenders with more money or better credit may offer lower interest rates. Before choosing a lender for Singapore personal loans, research interest rates to avoid overpaying. To avoid extra fees and penalties, check each loan’s terms and conditions.
Check for pre-payment penalties.
Early loan repayment is good, but be careful. Pre-payment penalties on personal loans will incur interest. Pre-payment penalties can range from three to six months of interest, so beware! Other banks may charge a $100–$200 administration fee if you pay off your loan early. When there are no penalties for early loan payoff, overpaying is pointless.
Understand the terms and conditions.
Know the rules. This is the most crucial step when applying for a Singapore personal loan. Make sure you understand all loan fees and repayment terms. Check for early repayment penalties and fees. Compare interest rates to avoid being overcharged by a lender with higher rates.
Make sure you are eligible for the loan.
Check your eligibility before looking for personal loans. Lenders can assess your loan suitability in many ways, including Credit score – Your credit score predicts your loan repayment. You can trust a new loan if you have good credit. Income and employment history – Lenders will lend money against your job income if you have been working steadily.
Research personal loans first. Check the details and ask questions. Know how an unsecured personal loan will affect your credit. Evaluate a personal loan. Proceed if necessary. If borrowing from friends or family won’t hurt your credit score, it may be better.