Nowadays, most financial institutions provide many different types of loans that you can make use of. However, with so many options available, it can be difficult to decide which one fits your needs and requirements best. That’s even more true if you don’t understand the differences between them. So, in this article, you will find a lot of helpful information about the differences between a private loan and a personal loan.
After you get a thorough understanding of these two types of loans and the differences between them, you will also find here the most important pros and cons that you should consider before deciding which one fits your needs best. Lastly, there is also a section dedicated to the process you’ll have to go through before getting the money from the loan.
You Need to Understand the Difference Between a Personal and Private Loan in Singapore
The first difference between a personal and private loan in Singapore to consider is the sources that provide them. If you want to borrow money for personal needs, then you can get it from all the financial institutions that are licensed by the government. On the other hand, if you want private loans, then besides these same sources, you can also get it from individuals and other types of private organizations.
While checking the available personal and private loans, you will discover a massive difference between the repayment structures. Most of the time, personal loans must be repaid based on a strict structure during a set period. As for the private ones, they provide a lot more flexibility, which means that you can make the repayments based on a more personalized plan based on your circumstances.
The last difference you should consider is the interest rate that you would have to pay. In general, private loans will require you to pay higher rates than personal loans. The main reason for this is the higher risks that lenders are willing to take, but the fact that you can borrow money from individuals and private organizations that may not be backed by the government also plays a role in this difference.
Factors to Consider When Choosing Between a Personal and Private Loan
If you are not sure which type of loan fits your needs and requirements best, then you can make use of the factors mentioned below. They will help you decide between a personal and private loan, ensuring that you can achieve your purpose for the lowest costs.
• Loan amount required. Many of the private lenders that you can find on the market are willing to lend higher amounts of money. On the other hand, personal loans are well known for their lower borrowing limit when compared with other types offered by the financial institutions themselves.
• Interest rates. Another factor that should heavily influence your decisions is the interest rates. As mentioned, if you decide to work with licensed organizations and get personal loans, then you can expect lower rates than what private lenders ask for. To ensure you get the best deal, it’s recommended that you do deep research before making a decision.
• Credit score. The last factor that will have a significant influence over your decision is the credit score because personal loans require that you have a pretty high one. Otherwise, you may be forced to look for other alternatives, one of the most common choices being private loans.
The Pros and Cons of a Personal Loan in Singapore
The first advantage of a personal loan in Singapore is the favorable repayment terms. A suitable plan will consider your financial situation to ensure you are capable of making the repayments without overburdening your lifestyle. The lower interest rate and limited amount that you can borrow will also work together to ensure that you can eliminate the debt pretty quickly.
As for the cons, the first is the high credit score requirement that many people do not have. Second, the application process may take longer and be more complicated, but there are some exceptions, such as some reliable licensed lenders. Sometimes, the low borrowing limit can work against you because it may not be enough to cover your needs, converting it into a con.
The Pros and Cons of Private Loans
Even though the repayment plan may not be as detailed as the one from personal loans, it can be very flexible, which is ideal for those who don’t have a fixed revenue. You may also be able to go through the application and approval process much quicker, so you’ll get your money very fast. Lastly, you can also take this type of loan even if your credit score is low.
First, the higher interest rate means that you will have to pay a lot more than you would have paid for other alternatives, so that’s a big con. Moreover, many non-licensed individuals and organizations provide these types of loans, and you will need to take higher risks if you decide to use their services.
How to Apply for a Private or Personal Loan
After you decide on the type of loan that you want, it’s time to start looking online for all the available lenders in Singapore. Using Google is one of your best choices because it generally provides the top options on the first few pages. So, you will only need to research a couple dozen lenders to find the best loan for your needs.
Next, you need to check the eligibility requirements of each lender because they can differ between financial organizations. You need to find those that you fully qualify for and that also have the lowest interest rates. At the same time, you must make sure that the lenders are also willing to provide the total amount of money you need.
Lastly, you can check the reputation and reviews of the top lenders and choose the one that has the best terms and a good reputation. After making your choice, you will have to prepare the documents and start the application process. Submit the loan application and wait for approval, then review loan terms and sign the loan agreement.