5 Things to Know Before First Loan Application

The demand for immediate financial resources can emerge at any given moment for any individual. This has led to a noticeable increase in the popularity of personal loans. In today’s digital age, acquiring a personal loan is as effortless as placing an order for food or groceries through your smartphone. All that is required is a reliable platform and access to the internet.

Without a doubt, the availability of financial applications has had a positive impact in our lives. The days of physically visiting a bank to apply for a loan are long gone. Nowadays, all you need is a smartphone with internet connectivity to apply for a loan.

. Nowadays, all you need is a smartphone with internet connectivity to apply for a loan.

What is a personal loan?

As the term implies, it is an unsecured loan that allows the potential borrower to licensed money lender in singapore from a financial institution such as a bank or online lender. These types of loans don’t require collateral to secure them, and instead, the creditworthiness and income of the borrower are evaluated to determine whether they qualify.

These loan types are often used for a variety of purposes, including consolidating debt, home renovations or improvements, paying for a special event, or even covering unexpected expenses. Moreover, it has a fixed rate of interest, which means that the rate of interest stays the same throughout the tenure.

What are the 5 Things to Know Before Your First Loan Application?

Credit Score

One of the most important factors you should know is that the licensed money lender in Singapore considers your credit score when deciding whether to approve your application. It is based on your credit history, including your payment history, utilization, and more. So, before applying for a application, ensure that your credit score is in good shape.

Purpose

These types of loans are often used for a variety of purposes. This includes home renovation/improvement, debt consolidation, expenses for medical purposes, and more. So, before applying for this type of loan, it is essential to have a clear idea in your mind of how you plan to use these funds. This is because it will help you choose the right amount and avoid borrowing more than you can afford to pay.

Terms and Fees

The terms for this loan as well as the fees vary widely depending on the lender and the loan product. So, once you plan to apply for the loan, carefully review the terms and fees associated with it. This includes the rate of interest, origination fee, prepayment penalty as well as late payment of fees.

DTI ratio

Debt-to-income ratio is yet another important factor that is considered by lenders while evaluating the loan app. Basically, the DTI ratio is the percentage of your monthly income that goes towards paying off your debts. These debts include credit card balances, mortgage payments, and other loans.

(Tip: Ensure you calculate the DTI ratio before applying and ensure it is within an acceptable range.)

Prepare your application

When you are finally ready to avail the facility of this loan, ensure that you have all the required documents with you. This includes identification, a statement of income, and employment proof. Further, you may also need to provide details about the loan purpose.

Which is the best app to avail personal loans?

Here, I’d like to share with you my personal experience. Around three months ago, I planned to purchase a few appliances for my new home. Well, I was short of funds as much money was spent on renovation. This was when one of my colleagues told me about Stashfin. You’ll be shocked to know that they offer interest-free loan, which are pretty hard to find nowadays.