Do you require more money for home improvements, an investment opportunity or to pay off those high-interest credit cards?
By: Hitesh Khan/
If you require more money, you may be surprised at how many different ways there are to use your existing assets to get a good loan.
Here are six sources for you if you require more money:
THE EQUITY IN YOUR HOME
By borrowing against the value of your private residential property, a figure that has risen substantially in the past few years, you can get a substantial sum at favorable rates. Consider a home-equity line of credit instead of a home-equity loan if you need money available for recurring expenses. That way you can withdraw money as needed and only pay interest on what you owe.
YOUR STOCK PORTFOLIO
If you own stocks, bonds or mutual funds, you can take out what’s known as a margin loan from a stockbroker for up to half the value of your securities. The interest you’ll pay is deductible up to the amount of income you earn on the loan amount unless the securities are tax-exempt. If the value of your securities drops, your broker may demand more of your portfolio as collateral. Stay on the safe side and don’t borrow more than 20 percent of your portfolio’s value.
YOUR LIFE INSURANCE POLICY
If you own a whole, universal or variable life insurance policy you can borrow the amount of the policy’s cash value. But be mindful that if you don’t repay the principal the outstanding debt, this will simply be withdrawn from your death benefit, which may hurt you later in life when a valuable policy can hedge against rising premiums.
Try the branch where you have a savings or business account or a credit cooperative. Regular customers sometimes earn rates of 1 or 2 percentage points below those for non-customers. An unsecured personal loan will come with a higher rate, but it may still be lower than what you’re paying on your credit cards. If you secure the loan, you can earn a lower rate and you may be able to borrow against a relatively new asset.
RELATIVES AND FRIENDS
Don’t borrow from friends and family long-term; you’ll fray your relationships. But don’t discount a personal loan, either. You may be able to pay a higher rate than your relative would earn on money if it were to remain in a bank account and the interest will still be far less than on a credit card.
Licensed money lenders may charge no more than 4% interest per month on the amount you have borrowed. But before you approach a licensed money lender, consider other alternatives, such as the various financial assistance schemes offered by various Government agencies.
As you are legally obliged to fulfill any loan contract you enter into with a licensed moneylender, consider whether you are able to abide by the contractual terms, bearing in mind your income and financial obligations. Borrow only what you need and are able to repay.
Be mindful that if you are unable to meet the contractual terms, the late payment fees and interest payment will be a financial strain not just on yourself but also on your family. The law requires moneylenders to explain the terms of a loan to you in a language you understand and to provide you with a copy of the loan contract.
Make sure you fully understand the terms of the contract, in particular, the repayment schedule, the interest rate charged and the fees applicable. Regardless of how much of a financial crunch you are in, you should always shop around different moneylenders for the most favourable terms. Even if you require more money, you should not rush into and commit yourself to a loan until you are satisfied with the terms and conditions.
Understanding credit options is useful so that you don’t take on more debt than you have to or are able to bear. Weighing credit options takes effort and may require creativity, but can save you a lot of money, worry, and stress. Most importantly, do not respond to those sms about giving you a loan, many of those may be illegal. Always make sure you borrow from a registered money lender. You can check the list of licensed moneylenders in Singapore here.
How to Secure Personal Loans Quickly
If you are in a financial crunch and are require more money to expand your business, the loan consultants at iCompareLoan can set you up on a path that can get you a it in a quick and seamless manner. Our loan consultants have close links with the best lenders in town and can help you compare various loans and settle for a package that best suits your needs. Find out money saving tips here.
If you are looking for a new home loan or to refinance, our Mortgage brokers can help you get everything right from calculating mortgage repayment, comparing interest rates all through to securing the best home loans in Singapore. And the good thing is that all our services are free of charge. So it’s all worth it to secure a loan through us for your business expansion needs.
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