5 Personal Loan Singapore Best Practices.


If you’re looking for a personal loan, there are a lot of options out there. But before you sign on the dotted line, you must know what you’re getting yourself into. 

Personal loans have become increasingly popular in recent years as an alternative to credit cards and home equity loans, but they also come with risks and drawbacks. Below are some best practices for taking up a personal loan:

Pay attention to APRs, not just interest rates.

Before committing to a loan, you should compare the APR, the annual percentage rate, to the interest rate. 

Unlike the interest rate, which is just the cost of borrowing money, APR includes fees and other costs in addition to the actual interest charged.

This may seem like semantics at first glance, but it’s important because most loans have higher APRs than their corresponding interest rates. 

Some credit cards charge as much as 25% more than their stated annual percentage rate.

A good rule of thumb is that if you have doubts about whether you can make payments on a particular loan without going over your budget or digging yourself into debt again, then don’t take out that loan!

Make Sure You Have Additional Cash Flow

It’s important that you have sufficient cash flow to pay your bills and manage any unexpected expenses. 

Make sure you have enough money in the bank to cover your living expenses and pay for car insurance, cell phone bill, clothing, and other necessities. 

In addition to these essentials, it’s also a good idea to make sure you can save at least $1,000 per month toward setting aside some additional cash flow for emergencies.

Read the fine print in your loan documents.

One of the best things you can do to protect yourself is to read the fine print in your loan documents. 

You should ensure you understand the loan terms and how much interest you will pay. 

The amount due each month should also be presented so there are no surprises when it comes time for repayment.

Some loans have hidden fees, such as late payment or prepayment penalties, which may cause more harm than good if not understood ahead of time.

Avoid fees by paying off your loan early.

You can avoid these types of fees by paying off your loan early. Loans with a variable interest rate will have an APR lower than the interest rate itself, meaning that paying off the loan could mean saving money in interest payments.

 If you want to ensure you’re avoiding any extra charges, ask if there are prepayment penalties when you take out your loan so you know how much you can expect to pay back if and when it comes time for repayment.

 Only Borrow What You Need

You should never borrow more than you need. When deciding how much to borrow, consider how much you can afford to pay back without putting yourself in a bind.

If possible, don’t borrow for things that can wait. If you’re thinking of buying a car or furniture, consider waiting until you have saved up the money to buy it outright—then avoid paying interest on top of what would be paid for the item itself!

Remember: Don’t borrow things that are not necessary items (like going out for drinks every weekend). It’s better to put this money into savings instead.


Personal loans can be a great way to make large purchases or pay off higher-interest debt, but they come with some risks. 

Make sure you read the fine print in your loan documents and consider prepaying if possible so that you don’t get hit with any surprises along the way.