If you have gone through your fair share of ups and downs and it is time to get things back on track, this might be the best time to take a loan in Singapore.
A loan in Singapore allows you to address that emergency, pay for college education, or fill a financial gap, but you need to understand every component before signing the agreement. For example, what is the interest of the loan? What is the monthly amount payable?
One of the most important things that you need to know is the loan tenure. It is true to say that the loan tenure is simply the entire length of the personal loan, car loan, or renovation loan, but there is a lot more. Keep reading as we dig deeper into loan tenure to help you understand how it impacts your loan.
Useful Facts about Loan Tenures
As we have mentioned, all loans have a loan tenure, which is the time required for repayment. However, credit card loans come with variable payments depending on the outstanding balance. Here are other facts that you need to know about loan tenures:
- Home loans have the longest tenure, which can run into several decades based on the amount.
- Business loans, personal loans, and car financing have shorter tenure of up to five years.
- The loan tenure largely depends on the amount of funds involved.
- Some lenders are willing to renegotiate the loan if you get into difficulty trying to repay it.
Why is Loan Tenure so Important?
- Helps You to Understand and Manage the Monthly Repayment
When taking a loan in Singapore, the first thing that runs through the mind is, “I need to clear this loan within the shortest time possible.” Sure, you do not want to carry the burden of paying a loan for years, but a shorter period means that the monthly payment will be pretty steep. This can easily result in serious cash flows issues and disrupt your financial management.
Therefore, you better strike a balance by ensuring you only direct a small portion of the salary to avoid disruptions. If you must repay the loan fast, consider instituting some austerity measures on some of the less critical expenses in your life. For example, can you watch movies on Netflix at home instead of paying a lot of money to get a ticket to the theatres twice every weekend?
- The Loan Tenure can Help You Calculate the Amount Payable
If the loan tenure is very long, it implies that you will pay more compared to taking a shorter period. A longer term means that you only pay a small amount every month to avoid exerting a lot of pressure on your finances. Whether you prefer a shorter or longer loan, the number of months involved will determine the total amount payable. You might want to use a loan calculator to check how different terms impact the total amount payable.
- The Loan Tenure helps You Determine the Cost of the Loan
The cost of the loan is the amount that you pay on top of the loan. In the example below, we will demonstrate how a personal loan of S$100,000 will cost on a monthly basis for periods of 2, 3, and 5 years.
|Interest rate / month||6.75%||6.75%||6.75%|
|Term/ Tenure||Two years||Three years||Five years|
Note how the monthly payment changes as you increase the loan term.
Now that you have seen the impact of loan terms, it will be a great idea to check it alongside other terms and conditions, and the best way to do this is through a lender comparison site. Consider working with Lendela to help you identify the loan with the best condition because they make the process so simple. You only need to visit their site, complete a short application and provide the required documents. Then, they will send the application to different lenders, and you will be notified of the floated offers to pick the best choice. Do not just go for any loan; work with Lendela to help you identify the best option.