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SG MONEYLENDER LATEST LOANS SINGAPORE NEWS What to watch out for with a personal loan

August 9, 2016

SG MONEYLENDER LATEST LOANS SINGAPORE NEWS What to watch out for with a personal loan

You may not actually get the interest rate advertised with the loan, which is known as the representative APR (or annual percentage rate).

This is the rate that you will see on posters or banks’ websites, but not everyone will qualify for it. In fact, loan providers only have to offer this rate to just over half (51%) of borrowers they lend to.

If your credit rating is less than perfect, you may be accepted for a loan but charged a much higher rate of interest than the representative APR. Your application for a personal loan will not necessarily be accepted.

How to check your credit report

Some personal loans have variable interest rates, meaning they can go up or down. If you’re only just able to afford the initial repayments you should avoid this type of loan in case they do go up.

Look out for any arrangement fees, which will make a loan much more expensive. Make sure you include them when you work out how much the loan is going to cost you.

Arrangement fees will be included in the APR – which is why you should compare APRs rather interest rates.

Think carefully before accepting any payment protection insurance (PPI) your moneylender tries to sell you. This is insurance that covers your loan repayments if you have an accident, are ill and can’t work or lose your job.

However, it’s been widely mis-sold in recent years and many of the policies on offer weren’t adequate or didn’t pay out at all.

Even if you do want this cover, you will almost certainly get a much better deal by checking prices with several different providers.

Do you need payment protection insurance (PPI)?

If you are already struggling to pay your bills and repay our debts, you shouldn’t take on extra debt such as a personal loan.

How to get the best personal loan deal

  • Don’t just accept the first rate you are offered by your bank or building society.
  • Shop around to see which providers are offering the cheapest APRs. Compare representative APRs (but remember that you may end up paying more if you have a poor credit history). A comparison website can help you do this.
  • Consider peer to peer loans especially if you have a good credit rating. These loans may offer lower interest rates and are available for smaller amounts. They are featured in most comparison tables.
Peer to peer loans

Check the best personal loan rates on the Which? website.

Find out how much your loan could cost with our Loan calculator.

Secured personal loans

If you own your own home, you may be tempted to consider a secured loan.

However, this is a riskier option as your home is secured against the money you borrow.

This means that if you can’t repay the loan, the lender could force you to sell your home to pay off what you owe.

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