What You Should Consider Before Taking a Loan
Are you thinking of borrowing from a moneylender?
Borrowing money from a lender is a big decision, one which you must take only after you have thought about it from every angle and explored other alternatives.
When in need of monetary assistance, approaching a licensed moneylender should be your last port of call. First, check if you qualify for a loan from various Government agencies. Approach the agencies directly to know about various loan options, their criteria, and other relevant details. In case you need money but can’t get a loan from a Government agency, only then approach a moneylender, but not before you’ve learned the relevant details.
In particular, you must keep in mind the following things.
Don’t borrow more than you need
This is the first precept of taking a loan: borrow only that much what you can need and can repay. If you take up a loan that’s beyond your repayment capacity, interest payment and late payment fees will become a huge financial strain on you and your family. In worst case scenario, you might fail to make the payments altogether and risk a legal proceeding against you.
Understand the terms before you sign
The law dictates that money lenders clearly explain all the terms pertaining to a loan to the lender in a language he or she understands and provide the borrower with a copy of the contract. You must ensure that you have fully understood your contract terms, especially details related to the rate of interest, repayment schedule, and applicable fees.
You must read the loan contract carefully. Understand all contractual terms, and in case you need some legal advice, don’t hesitate from hiring a professional who can explain the terms to you. Agree to all contractual terms only after you have understood what they mean; otherwise, you might be in for a nasty surprise later. For instance, the money lender sometimes adds a caveat against the borrower’s property. If such a caveat is there in your contract, you must know that it can prevent you from selling your property, unless you first repay the full amount you owe to the lender. You might stand to lose all of the proceeds or a big chunk of it if the money obtained through the sale of the house is used to repay the loan.
Do some research
Even when the only option available to you is borrowing from a lender, don’t agree to whatever terms the first lender lays down. Just like you check with different vendors before buying an expensive utility item, shop around several money lenders until you find something that’s reasonable and look likes the best you can get under the circumstances. Whether it is love or taking up a loan, only fools rush in. Don’t make this mistake; otherwise, you might sign a contract that you will repent later.
Last but not the least, you should always borrow from a moneylender who’s licensed. You can verify if a lender is licensed or not by logging on to the website of Ministry of Law Singapore, where you’ll find a list of legal money lenders Singapore.