There was a time when people would save patiently for years before taking going on a holiday. The situation today has changed significantly. People with a conventional approach to personal finance will advise you against taking a personal loan to go on a holiday. Most lenders in Singapore that offer personal loans will not ask you for the purpose of taking the loan. However, if you have a high income in comparison to your expenditure, you do not have too many debts, and you have a respectable financial standing, opting for a personal loan to go on a holiday is not a bad idea. In fact, you can approach lenders in Singapore that offer travel loans which are meant specifically for going on a holiday.
Benefits of Taking a Personal Loan to Go on a Holiday
If you are still of two minds about getting a personal loan to go on your dream holiday, you can take a look at the following benefits:
– You can travel the world today instead of postponing it for another day in the future. You can worry about paying back your dues once you get back from your trip. In fact, if you have prepared a plan on how you will be paying the loan back, you will not have to worry at all.
– Your loan will get approved quickly if you have all your paperwork in place. The interest rates offered are low in comparison to other sources of funding such as loans from moneylenders or credit card debts.
Things You Should Consider Before You Apply for a Personal Loan
It may not be wise to jump and apply for the first personal loan that you come across. So before you apply for a loan, consider the following points:
Start Your Search as Early as Possible
If you have decided that you will take a personal loan to go on a holiday, make sure that you start your search early. There are banks in Singapore that will give approval for your personal loan within a day, but sometimes this may take a while. So you should start searching for a loan early, ideally weeks before your trip so that you can pay for your trip on time.
Compare the Interest Rates Offered by Various Banks
When you apply for a personal loan, banks will offer you a flat rate as well as an Effective Interest Rate (EIR). To compare loans with different tenures, you will have to take Effective Interest Rate into consideration. EIR accounts for the effect of the principal repayment schedule as well as the processing fee. When you choose your loan make sure you compare the EIR as this reflects the real cost of your loan.
Keep the Loan Amount as Low as Possible
You should avoid going overboard when you choose your loan amount and borrow the sum that you absolutely need. Do not borrow the entire amount that the bank is willing to offer. The amount you borrow should be based on how much you require and how much you can afford to repay over the next year or so. Remember that non-repayment can lead to a fresh batch of problems and reflect poorly on your credit score.
Look for Promotional Deals
Many banks in Singapore offer promotional interest rates on special occasions or otherwise. If you manage to get a promotional offer, makes sure you take advantage of it. For example, currently, with Standard Chartered CashOne, you will get a cashback of up to S$2,088 once your loan is approved. In addition, many banks are offering low interest rates and/or extra cashback to make their offerings more striking.
When you apply for a personal loan to go on a holiday and repay the loan by opting for a fixed instalment each month over a set number of months, you can plan ahead easily on how much you need to spend and save. A much-needed holiday with additional funding can be a source of happiness, but it is imperative that you understand how these loans work and take time to understand the offers available with all major banks in Singapore. Keep in mind that you need to repay this as soon as possible.