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You must fully understand that borrowing money from the reliable money lender singapore can put you in a situation where your financial responsibility will be completely altered. This is because getting a personal loan or any other kind of loan will put you in a situation where you would have to make financial sacrifices just to be able to meet loan repayment terms. However, if you still feel that you really need to borrow money, then you must be able to understand the basic concept of the two most common categories that go with any type of loan that you will apply for. Whether your lender is the conventional or traditional loan institution like the bank; or an alternative lender like a payday loan instant cash lender, there are two basic things included in any type of credit loan that you should know and understand. These two basic factors are whether the loan will be secured or not secured.


Secured Loans


Loans are normally secured if the lender would require the borrower to put up collateral against the amount of money being borrowed. Secured loans involves large sum of cash. This is the main reason why lenders require some form of security for it. The collateral is usually of the same value as that of the loan amount or in some cases even higher. Secured loans allow applicants to borrow a sizable amount of money and since it is secured the interest levied on it is relatively low. Secured loans include mortgage, (any type of) vehicle and home equity loans.


Unsecured Loans


In contrast to secured loans, unsecured loans do not require collateral as security. Credit Card purchases, personal or signature loans, educational loans and home improvement loans are just some that is under the category of unsecured loans. The main disadvantage of getting unsecured loan is that the interest rate for the amount borrowed can be prohibitive. This is also the reason why, most individuals who opt to borrow money under unsecured loan would only ask only for small amount. This is to protect them from paying a very high interest on the loan.

It seems that nowadays, borrowing money has become part of our everyday living. Development in the field of science, medicine and technology have pushed people to join the bandwagon of purchasing things through the use of credit cards and to the extent of getting payday loan just to support their need to be a part of a developing society. Borrowing money can be a life saver if you are faced with a life and death situation but do not have enough funds to make it happen. For medical and other threatening instances, borrowing money blindly can be an excused but for other purposes it is best to thoroughly analyze what you’re getting into.


Consider the Interest Rates


Borrowing money can be very expensive if you end up getting one with a very high interest. There will always be an interest when you borrow money and dealing with the lender and knowing how to look for the lowest interest rates on the loan is the only way you can make borrowing a little more affordable.


Effects on Your Credit Score


You must remember that every time you borrow money, you will be putting your credit ratings at risk. There’s no guarantee that you will have no problem paying off the debt. What if you can’t? Unable to pay your debt would put a bad mark on your ratings thus making it difficult for you to make future loans.


Bad Idea Borrowing from Friends, Family and Relatives


Protecting your Credit stability by borrowing from family, friends and relative can be the worst move that you can make. While you may get an interest free loan, think of the repercussions if you are unable to pay them. Degrading your credit standing is far better than losing your friends, relative and family. And this will happen in the event that you can’t pay them back.


Borrowing Will Put Limit on Your Budget


Paying off a loan will decrease the flexibility of your budget. There will be limit to how much from your cash you can use for other expenses because you will have to give priority in paying off your loan.

Borrowing money with the help of the licensed money lender singapore review due to a very important but unexpected expense can be very stressful. Being in a position wherein you are forced to apply for the lowest personal loan singapore can be twice as bad. However, situation like this are common, especially to average earners whose source of income are just enough to cover their expenses. However there are still ways by which you can still manage to pay off your debt at the soonest possible time taking the following ideas to mind.


Stop Borrowing Money Altogether


If you have just started getting a loan, promise yourself that it will be your last and if you are about to finish off a loan promise yourself the same thing. It may be hard to stop borrowing but it is just a matter of convincing oneself that there are other means of solving financial problems. One of the common reasons why people are up to their neck in debt is because of purchasing items then paying them off by installment. Avoid such practices and this will help curb your debt problems.


Start a Savings Account


One of the best solutions in controlling your urge to borrow is to put up a savings account. If you get a chance to somehow come up with a reasonable amount of surplus, create a savings account and religiously make deposit of any amount each month on the said deposit. By the time you realize it, you will have more than enough money to use in the event of a financial dilemma. In short, this savings will be some sort of a financial buffer in case an emergency expense comes along. This will also prevent you from borrowing money to cover the emergency.



Other Ways to Control Borrowing


Organizing your debt, creating a budget and sticking to it and using some of your excess funds to pay off some of your debt are ideal ways of controlling your urge to borrow money. If you can find the time to give this ideas a second thought, you might just be surprise to wake up one morning and find yourself free from debt.

It is not uncommon that because of continuous borrowing, you may end up having more debts than you can manage. When this happen, it is not surprising that you may get overwhelmed and perhaps be confused on how you would go about paying off the debts. There is always a solution to every problem and these include those from getting more than one personal loan. The first step in resolving this kind of financial dilemma is to initially prioritize all of your debt in the manner of importance.


Prioritize Your Debts


Create a spreadsheet that will classify you debt into Priority or Emergency Debts and Non-Priority Debts. Priority or emergency debts loans are the ones that should be immediately acted upon or resolved or you will either be taken to court, arrested for non-payment of debts, disconnection of basic utilities (electricity, water, gas, etc) due to non-payment and eviction for not paying your monthly rent or mortgage amortization. This type of debts should be immediately settled or at least compromised. No matter how bad your debt situation is there is always room for dialogue between you and the person you owe money to. Priority debts include court fines (such as accumulated parking tickets or any other traffic violations); non-payment of income tax; child support and maintenance if divorced; utility bills; mortgage, rent, or security loans where your property is the collateral. Non-Priority debts are those that do not incur serious damage to either your credit reputation or income. Non-priority debts usually include overdraft; personal loan; payday loan; loan from families and friends; and Credit card loans. However, you also cannot leave this debts hanging in the air for a long time because the lenders can and will file the proper lawsuit against you if you continue not to repay them. In case of money borrowed from relative and friends, you just might end up losing all of them if you just keep on promising them of payment but never do. When paying non-priority loans make sure that you pay-off the most expensive debt first. When this is done paying off the rest would be easy to manage.

All Financial resources that you accumulate and own are called “Personal finance” and any decision and activities you make relative to your income resources will gauge how healthy your financial status is. Not borrowing money and keeping your credit to a minimum is a sign of having a sound financial status. This is ideal but achieving this can be somewhat difficult. However, there are basic financial rules to follow if you would want to have a healthy financial life. Following and applying them properly will hopefully lead you to a positive financial goal. The following is something to think about and may prove helpful in leading you to a bright financial future.


You need to know how much you are Worth


First ask yourself, “What is my net worth?” To do this, you would have to initially calculate your gross worth which includes everything that you own of value. These include your assets and income resources. Deduct your liabilities (what you owe) such as loans and other expenses from your gross worth and you arrive on how much your net worth is. The result from deducting your gross worth against your liabilities should always be positive because if not, then you have a big problem.


Create a Financial Plan


In order for you to stay in the black follow the most important financial rule which is to plan your expenses against your income. You need to eliminate expenses that have proven to be unnecessary. It is equally important to reduce some of your expenses to help build a sizable amount of surplus which in turn will help you when a sudden financial emergency arises. In order to achieve this, there is a need to spend your money wisely by prioritizing and spending only what you actually require. Prioritizing your expenses can be done by making thoroughly analyzing your financial status where you can come up with a good plan to positively use your income resources. However, your income and expense will be changing so in the same way, so make income and expense projections projection plans at least once a year.