All About Loan In Singapore
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Pros And Cons Of Personal Loans

Whether you should take up a personal loan depends on the details of your circumstances. When there is an urgent need for cash, but do not have liquid assets to quickly churn out finds, a personal loan certainly looks like a viable option. Drawing out cash from credit cards can be much more expensive than taking up a personal term loan. Just bear in mind that if you have assets to use as collateral, you can more likely to get attractive interest rates.

With all major organizations using technology to stream line processes, you can these days get access to personals as fast as 24 hours. You will of course have to be able to provide all required documentation for such a fast turn around time. And funds can be credited directly into your personal account as well. Here are the pros and cons of taking up personal loans.


Flexibility: Personal loans can be used for almost any purpose you can think of. You can use them for leisure or business. Some of the common purposes include, travel expenses, medical expenses , purchasing the luxury items, renovations.

Fast access to finds: Because you can get money in less than a day in many cases, it can be suitable if you need money for emergencies.

Minimal documentation required: A lot of times, all you need to provide are your identity card and income proof.

No need to pledge assets: Although the loan tenor for personal loans are short compared to loans like mortgages, you will not have to pledge any of your assets for loan. Saying this, it is common for banks to ask for a personal guarantee. So this might be the way to go for individuals who have no assets to pledge for loans.


High interest rates: Because there is no collateral involved, interest rates for personal loans are comparatively higher than those with collateral like mortgages. With no collateral, lenders view these loans as of a higher risk and therefore would charge a higher interest rate.

Penalties: You will usually have to repay the loan according to the payment schedule laid out to you. If you should receive a sudden windfall and want to redeem the loan, you will most like be liable for a penalty fee for early redemption.

Credit rating: As these loans are riskier than secured loans, most lenders will want to see a good credit rating. So if your credit rating is poor, yo will have to go for bad credit personal loans. Bad credit personal loans will have an even higher interest rate as the risk to the lender is even higher.

Should you obtain a personal loan?

The answer really depends on your personal circumstances. If you have an immediate urgent need for cash funds, and don’t have any liquid assets to convert to cash quickly, Whereas if you have assets like gold, shares or real estate, you might consider taking a loan against these assets as it will have a lower interest rate.

Be sure to be an honorable borrower and repay your loans in a timely manner. Failure to do so will not only get you into legal trouble, it will also adversely impact your credit rating record.