What Is Preventing You From Taking Out A Loan In Singapore
The basic lesson that most Singaporeans are discouraged from lending. This later leads to most people getting taboos concerning owning money. Actually, loans may not always be a bad thing. In reality, sometimes not utilizing a loan could lead to more financial losses.
Below are several things you have to know:
All Debt Is Not Bad Debt
There is good debt and bad debt. The good debt will not only pay for itself but ultimately it generates more cash than you earlier owed. A key step in increasing financial prudence is by knowing to tell the difference between the two. When debt will generate benefits and eventually pay for itself – like through education or home loan. Then it is worth taking.
They Can Help Preserve Your Emergency Savings
At times it is more financially wise to use a loan instead of spending all your funds at once. This does not mean that it is good to be careless and acquire lots of debt. Instead, it means you need to be selective and repay your existing debts in a manner that you will have some cash left in reserve.
Not Borrowing Does Not Mean A Great Credit Score
A popular myth is that, by not taking out a loan, your credit rating will be “clean”. This means that most Singapore legal moneylenders are ready to offer you loan money, to purchase a house, establish a business, etc. But in reality, when you have not made use of any loans before, your credit rating will not be the best (this is AA). But instead, the credit score will be recorded as Cx, thus meaning that you are an unknown factor.
The simplest way to have the desired AA credit rating is by using credit cards for payment means only. Put differently, you could pay for some things such as groceries, petrol, or dining, using the credit card ( this are things you would go buy anyway). Immediately after ensure you refund the whole amount charged to your card.
Owing Money And Can’t Repay, Your Possessions Will Be Taken
Secured loans and unsecured loans are different.
The secured such as the mortgage, you offer security for the loan. Thus your lenders will indeed acquire the collateral (this is the item pledged on the loan). however, with the unsecured loans, no collateral is needed. When you completely not able to pay it off, you only will be in default. Through this your score will be lowered, thus you cannot access loans in the near future.
In most cases, the lending institutions do not like having to reclaim borrower’s property. They often times end up losing the loan money. They even do not like suing people as it takes up a lot of and money. Also, the process of chasing down the defaulters takes time.
Under normal circumstances, you will be sent to credit counseling when you cannot settle your debts. Thereafter you are provided with Debt Consolidation schedule. This lowers interests and changes the terms of repayment until you get to settle the debt.