This article is brought to you by Standard Chartered Bank (Singapore) Limited (“Standard Chartered”). All information provided is for informational purposes only.
5 personal loan myths debunked
Almost everyone will take up a loan at some point in their lives – it could be for a dream wedding, a new car or house, or even some unexpected repair or medical bills.
If we tell our family or friends that we’re taking up a new home loan, they will most likely congratulate us on our house purchase. Yet, the response may be starkly different if it’s a personal loan that we’re taking.
Loans are tools to manage your finances, yet personal loans seem to get a bad rap. Why is that so? Let’s set the record straight on some common personal loan misconceptions.
Myth #1 – Personal loan is bad for my financial health
If you already have multiple loans or are paying high interest rates, it may not seem like a good idea to increase your debt burden. However, when used as a debt consolidation tool, a personal loan can reduce your interest payment by a few hundred dollars.
Perhaps you would like to improve yourself and get an upgrade on your job. Education is one of the best investments you can make in your life. If you’ve decided that the additional qualification will bring you closer to your goals, a personal loan can help you cover expenses beyond your tuition fees.
Myth #2 – The interest rates on personal loans are very high.
As an unsecured loan, personal loan interest rates are naturally higher than that of secured loans. However, when you compare it with other unsecured borrowing options, such as credit cards, personal loans have much lower interest rates.
If you are paying 26% or more on your outstanding credit card balances, it’s a better idea to take up a personal loan with a lower interest rate so that you save on the interest payments.
Myth #3 – It is a long and tedious process to apply for a personal loan.
Are you thinking of long waiting time at the branch, filling in physical forms and providing never-ending supporting documents? That is a thing of the past – you don’t even need to get up from your couch to apply for Standard Chartered’s CashOne Personal Loan.
Apply online1 using MyInfo and skip on having to scan and upload your supporting documents. You’ll also get cash disbursed into any existing bank account of your choice within 15 minutes2 upon approval.
Myth #4 – It is better to apply for a loan that is intended for a specific use
In comparison to specialised loans, personal loans offer versatility of usage. Compared to a renovation loan that is typically disbursed to your contractor based on the renovation quotation upon approval, you don’t need to share the purpose of your personal loan with the bank.
You’ll get to fully decide how you want to use the loan amount, from paying for part of your renovation to furnishing your new home.
Myth #5 – We should apply for more than we need, up to the maximum loan eligibility
Some people will argue that it’s better to have extra cash on hand than be in a situation where you don’t have enough.
In Singapore, there is a limit to how much you can borrow, so applying for a higher amount than what you need may have an impact on other financial decisions at a later date.
Before applying for a CashOne Personal Loan, it is useful to use the loan calculator on our website to ensure that you can afford the monthly repayments – falling behind on them will result in late fees and charges, and also impact your credit score.
Do any of these myths surprise you, or have they ever stopped you from taking up a personal loan?
By knowing the facts and seeing personal loans as the financial tools they are, you will be able to match your financing to your situation.